The global supply situation determines the price level on the cereals market - is what to expect for 2016/17?
According to accepted doctrine, the ratio of supply and demand determine the price level. Including harvesting and consumption, the development of closing stock as residual or the closing stock figure in % of consumption are to assess the market situation ("stock to use ratio") used.
For the fiscal years 2016/17, 2014/15 and 2015/16, rising global end stocks between 460 to 500 million tonnes can be read from the USDA estimates. Compared to the figures in the previous 3 years were between 340 and obviously the offer failed greater than 400 million t. as the consumption is increased. The result is a lower price level compared to previous years.
However, the supply ratio of "percentage end inventory for consumption" is better suited for a closer look. In the recent 3 years, you could calculate closing stock consumption between 21% and 24.8%. The 10 - year moving averages is approximately 21.8%. For the coming year 2016/17, a supply number is estimated by 24.7%. Below-average grain prices are derived, which may be approximately at the level of the expiring year.
But this approach is too still little differentiated. It is essential for the influencing supply at world level, that there is a sufficient secured volume of trade between the surplus willing to export and the import subsidy objective. Import-needy regions without purchasing power play little role in the pricing. There are also reluctant to export surplus areas despite large amounts of storage for the price assessment in considering to draw.
In recent years, China has accumulated huge stocks of cereals, which have reached nearly 50% of world reserves. Nonetheless, China is confined to an export volume of less than 1 million tons, but still a net importer by Meanwhile lowered 15 Mio.t per year. For the year 2016/17, the worldwide increase of inventories with 12 million tonnes represents almost exactly the increase in China with 13 million tonnes.
Clings to China from global supply looking estimation of above-average grain supply for the rest of the world marginalized themselves. The relevant % end stocks to consumption is moving with orders of magnitude to the 17% between 5% and 6% below the global supply. For the year 2016/17, is to determine that the number of supply without China tends to falls, while the figures including China are almost unchanged.
Follow the to be derived from previous years interrelationships between price level and supply figures coming can be from the first USDA forecast results for the year 2016/17 a price reduction of almost out derive. At least a stabilization on slightly appealing level is justifiable from the current level of knowledge.
Despite this basic orientation , you should refer to outstanding growth and harvest risks, which can cause even substantial changes in a possible La Niña year.
