Perspectives on the grain market by 2015/16

Sufficient grain supply (!) -Harvest estimates by 2015/16 under conditional in the recent may issue of the monthly estimates of the world grain market, the International Grains Council (IGC) on larger numbers than a month ago comes. So join the IGC on the previous higher estimates of the U.S. Department of agriculture (USDA) and the food and Agriculture Organization of the United Nations (FAO).

Despite all the differences of the various institutions of the treasure with its various survey and evaluation methods you can get close relative is in the critical assessment of the supply situation. The largely matching results are: - harvesting 2015/16 will be smaller than in the previous year, but still above the multi-annual average, - grain consumption tends to be higher, consumption growth remains below the gains of previous years - end stocks vary within a limited framework and are influencing closing stock consumption ratio with their absolute numbers for years unknown peaks - (stock to use ratio) is slightly smaller than in the previous year , but still above the long-term average of 20.2%.

Average level of the expiring year is should it confirm predictions in principle, with grain prices at least in the expected. But...

For the assessment of prices and price history, yet some warnings of current and future weather developments for the crucial grain formation stage are to be out:

• Currently, excessive rainfall in the southern part of the Great Plains, threatening that the U.S. wheat harvest in terms of quantity and quality to reduce.
• In Canada , sensitive summer drought is expected in some provinces.
• A prolonged period of precipitation poor weeks in the income decisive period now in Central growing regions of Russia .
• In India , the wheat harvest is quite rainy. Losses in terms of quantity and quality will be covered from the extensive inventories. Quality wheat has already been introduced. In recent times, there is an unusual heat.
• The weather phenomenon El Nino will provide crop loss due to drought in Eastern Australia . Now, the order works suffer from too little precipitation. Wheat prices are 30% higher than the Chicago prices on the Sydney stock exchange.
• In China EL Nino will cause in the North (grain) and drought in the South (rice) floods. The Chinese Weather Bureau assumes a middle intensity.
• How much impact in Argentina and Southeast Brazil from El Nino with heavy rain are expected, remains open given the unpredictability.
• In Central Europe the rainfall deficit in the plant populations with significant references to income reduction is noticeable. Last year, much feed wheat has been harvested as a result rain falls at the inappropriate time. The price spread between the quality levels was correspondingly large.

The future harvest estimates are must make still some corrections. The consequences for continuous price adjustments are obvious.

The Russian export policy could provide for uncertainty. A price-sensitive export tax with progressive design applies from 1 July. The 1st stage $1 je first harmless sounds, developed but additional amplification effects in increasing inflation.

Uncertainties also the future history to assume the exchange rates . Here, the Greece problem plays a significant role. Per 0.1 change dollars to euros is with price changes between 1.5 to €2 each dt can be expected, where the falling direction has greater scope than the rising.

 Above compilation demonstrates the fundamental link between global supply situation measured at % end inventory for consumption (stock to use ratio) and the average as well as the range of year-specific prices on stock exchange at the level of the producers.

Should the previous estimates at a level similar to remain, is to be expected to settle at least. on the average of the previous year with ployment cut prices.

At the beginning of the marketing year , the prices could be lower than in the further course of the year. High overhang stocks and a good average harvest can cause in the competition for the storage capacity to the beginning of the business year an offer jam with adverse consequences for price developments. That could worsen when quickly a-other following crops of part of or enjoy stretched end of harvest if the wheat with average quality should be harvested, is likely also the last price spread down less wide.

To what extent repeats the special export situation of last year with the failure of Russia, a weak euro exchange rate and dollar caused little competitive US offerings , is difficult to predict. The import demand of the North African countries is slightly lower due to the good harvests in the western regions.