Estimates for the grain market in 2013/14 compared to the previous year

Significant changes on the grain market in 2013/14 compared to the previous year

When assessing market data, it is advisable not to use absolute figures because they are essentially based on estimates. Estimates are in turn made using different methods, which inevitably lead to different results. An estimation-related earnings risk remains.

In contrast, changes in the key data are more meaningful, provided that the estimation methods have been applied unchanged, although in this case there are still reservations about reliability, but the direction of development is made clearer.

Comparison of different timely estimation results for the 2013/14 world grain harvest

Although the major estimating institutions USDA, FAO and IGC arrive at different individual results, measured against their own data specifications, the following are jointly estimated

• above-average increases in harvests compared to the weak previous year
• strong increases in consumption are estimated
• a considerable increase in closing stocks and thus a favorable stock situation
• an improvement in the supply situation compared to the previous year

All three institutions come to the largely consistent conclusion, with different figures for methodological reasons, that despite all the increases, the supply situation in 2013/14, measured against the 5-year averages, is at best just average.

If we look at the most important changes in the key exporting countries based on the data from the latest USDA estimate (see chart), it becomes clear that around 45% of the increase in the harvest in 2013/14 is attributable to the USA, around 12% each to Russia and the EU-28, 9% to Ukraine and a small amount of less than 5% to Canada.

In the export business, the USA is expected to achieve the largest increases compared to the previous year, with the Black Sea states Russia and Ukraine in second place. The EU-28 and Canada will only achieve slight increases in exports.

The weak increases in harvests and exports from Argentina and Australia, whose harvests usually take on a supplementary follow-up function at the turn of the year after the northern hemisphere harvests have been completed, deserve particular attention. In all likelihood, there is unlikely to be any significant improvement in 2013/14, meaning that the global supply situation from this part of the world will not see any noticeable improvement. From today's perspective, few deviations are to be expected for pricing, unless weather-related changes occur in the harvest results in the southern hemisphere. The probability of unstable weather developments is more pronounced in these regions than elsewhere.