An above-average grain harvest in 2013/14 at global level is becoming increasingly likely. At 1.951 billion tons, the expected result is around 168 million tons higher than the very poor previous year. Compared to the previous year, the increase is around 100 million tons. If one looks at the average annual increases of the last 5 years, averaging +50 million tons per year, then the two-year average increase is in the good mid-range of the multi-year growth rates.
However, high harvests are not automatically linked to a good supply situation, as consumption and stock trends must also be taken into account. The previous year's very weak harvest tore deep holes in the surplus stocks, which first need to be replenished. At least average increases (with the exception of the bioethanol sector) must be taken into account for the increase in consumption for direct human consumption, for feed purposes and for industrial consumption (maize for bioethanol).
If the consumption volumes for 2013/14 are deducted from the sum of the low initial stocks and the high harvest, the remaining stocks can be interpreted as stocks. Many years of experience have shown that these closing stocks should amount to around 20% of consumption or 385 million tons, assuming an average supply with average prices of just under € 200 per ton.
For 2013/14, however, the latest harvest estimates indicate a percentage of only 18.5% or 355 million tons. There is therefore a shortfall of around 30 million tons to the supply average. According to the old market rules, this results in a price level that should be in line with the good average for the years.
However, there are a number of additional influencing factors. The decisive factor is sufficient grain growth in exporting countries such as the USA, the Black Sea region, the EU-28 and other exporting countries in the southern hemisphere. As the world's largest exporter, the USA is expecting a well above-average harvest despite all reservations. In the Black Sea region, this only applies to Ukraine and Kazakhstan, while there are still a number of uncertainties regarding the actual harvest outcome for Russia. An above-average harvest in the region of 300 million tons (previous year 276 million tons) is also expected for Europe.
Compared to the weak previous year, there is therefore a considerable export volume available that can certainly meet the increased demand from importing countries. Nevertheless, unlike in previous decades, the quantities are not available in abundant surplus to cover any demand...
It therefore remains the case that the supply situation in 2013/14, which is not abundant, leads us to expect a higher price level. The exaggeratedly high prices of the previous year cannot serve as a benchmark.
However, the 2013/14 grain year has not yet ended. Surprises can therefore not be ruled out.
