Cereals market: Mobile end stocks gaining in importance for pricing

Changed supply situation on the world market in cereals - China has 40% of the supplies

After several years of decline overhang stocks resume to for 3 years grain at world level to the height of more than 400 million tonnes. The Chinese closing inventories have grown continuously for many years.  The fluctuating stocks of the 8 main export regions although recently laid back to, but does not reach the level of previous years. The Chinese inventories higher than that of the eight leading export countries togetherwere in the last 3 years. For the year 2015/16 calculated a 40% share of China on the world grain stock.  

A distinction between so-called Mobile and immobile overhang holdings is appropriate for the assessment of the supply situation and the price formation process.  

Be regarded as mobile overhang stocks can end stocks in the major exporting countries . Exporting countries are willing and able in case of unforeseen need higher export volumes to to provide. High mobile end stocks represent a security for importing countries to be able to stretch their shopping plans throughout the year no major price risks. 

Absolute and relative to the volume of imports falling mobile closing stock , however, increase the risk of purchase price. Although the surplus stocks of the main export countries have increased in the past 2 years, but in relation to the import volume changes were relatively small.  The estimated mobile closing stock in relation to the imports should go back again for the upcoming fiscal year 2015/16. This development increases the price risk.

A striking example of immobile overhang stocks provides China. In the last decade, China has ceased to export grain in large quantities. On the contrary, Chinese imports by 3 million tonnes have risen to about 20 million tonnes.  Import volumes are up on sorghum making, because Chinese corn prices are guaranteed State-at a level of approximately €350 / t.  Imports of the much lower-priced world market should be kept in borders.

 In recent years sorghum from Australia and the United States is but imported and bypassed so that domestic maize as expensive food. Generous swap offers from Government storage warehouses were taken by buyers only slightly throughout. So far, speculation about a resumption of Chinese exports were not confirmed. However, it is reported that imports be regulated more.

Between the overhang stocks and grain prices is a negatively correlated relationship. Falling end stocks lead generally to higher prices and accordingly vice versa. The stronger weighting of real estate closing stock and others in China meant a less mobile ending inventory volume in the exporting countries. While the grain stocks by 2% return for 2015/16 at the global level, the decline is nearly 11% in 8 regions of the export. For the volume of world trade the game room is clearly close. The Treasury figures indicate a decline in the global grain trade by 10 million tonnes.

The mobile closing stock therefore even more importance for the formation of prices than in the past. Pending for the autumn 2015 harvests of the big exporting countries United States, Australia and Argentina can be good under the sign of an El Niño weather for surprises. In addition affect the impact of the Russian export control the export events as well as the development of the exchange rate dollar euro.

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