Seaborne trade patterns, port activities and bulk carrier employment are changing as a result of the latest shake-up in the grain market. During the current 2013/14 crop year ending June 2014, exports of wheat, corn and other coarse grains from the USA and Black Sea region are expected to increase greatly, while some other suppliers see lower volumes.
This grain trade adjustment represents a turn towards a more ‘normal’ pattern after the even more dramatic upheaval of the previous 2012/13 crop year which ended in June. During that period US and Black Sea exports plummeted when poor harvests devastated crops, reducing their combined share from almost half of world trade in the preceding period, to 36%.That proportion could rise back up to 43% in the current crop year.
RECOVERING BLACK SEA EXPORTS
For Black Sea exports of grain it has been a roller-coaster ride in the past few years. In the past twelve months these were greatly reduced after achieving a remarkable recovery in the previous crop year from the preceding severe setback. In 2012/13 Russia, Ukraine and Kazakhstan saw an overall fall of almost 15mt (million tonnes) or 25% from 60.5mt in 2011/12, to 45.6mt.
Last summer’s harvests in the Black Sea region were damaged by excessively hot and dry weather through the growing season, drastically reducing crop yields in many areas. Grain production in the three countries totalled 125mt, a decline of over one-quarter. The summer/autumn 2013 harvests in this group are much better, currently estimated at 161mt, a strong 29% rebound.
The upturn in Black Sea supplies, resulting from more favourable weather, has great significance for the world market, because of the region’s key export role. Extra supplies of lower quality feedwheat available from all three countries, plus sharply higher corn exports from Ukraine, will be a feature of international trade during the period ahead.
Recent (end-September) International Grains Council forecasts suggest that the three Black Sea suppliers together will export much larger quantities of wheat and coarse grains. In 2013/14, Russia’s total may be 21% higher at 18.8mt, as shown in the table. Ukraine is likely to see a rapid 25% increase to 28.8mt, but Kazakhstan’s volume could be only very marginally larger at 7.2mt.
REVIVING US EXPORTS
Greatly improved weather in the USA this year, compared with that seen in last year’s growing season, has raised grain output and also boosted soyabeans production, improving export availability. US exports of wheat and coarse grains in crop year 2012/13 ending mid-2013 fell steeply by 22.7mt (31%), to 49.9mt, reducing their share of global grain trade from well over one- quarter to well under one-fifth. In the current year, a sizeable
bounce back is envisaged. Lower wheat production this summer is expected to be more than offset by a huge expansion of corn and other coarse grains output.The US wheat harvest was completed earlier and was 7% lower than last year’s volume, at 58mt. Coarse grains production is estimated at 366mt, an increase of over 80mt or 28%, resulting from a slightly larger area coupled with much higher yields.
Availability of US grain in 2013/14 consequently has expanded noticeably.Wheat exports could be 9% higher at 30.0mt, while corn and other coarse grains exports could be 40% higher at 31.3mt.The overall total according to IGC calculations is likely to be 61.3mt, almost one-quarter above the preceding very low annual total.
CHANGES AMONG OTHER EXPORTERS
Elsewhere, some sizeable changes among key suppliers are foreseeable in the current crop year. One notable variation is a possible downturn in Brazil. Grain exports from Brazil, predominantly corn, have become a key feature of the global supply pattern in the past few years and reached 28.2mt in 2012/13, almost triple the preceding year’s volume. A reduction may follow, reflecting lower production.
These changes are taking place against a background of what is expected to be a continuing fairly flat grain import demand picture. In 2012/13 global wheat and coarse grains trade evidently totalled 266.2mt, a marginal 1% decrease from the previous year. In 2013/14, this reduction is estimated by the IGC to be more than reversed with a 2% rise, to 270.7mt, although unforeseen rises and falls are a defining feature of grain movements.
Support for import demand around the world in the twelve months ahead probably will be derived from the improved supplies emerging onto the market, and lower international prices. But there are not many signs at present of lower domestic grain production in importing countries which could potentially stimulate further foreign purchases.
The main positive feature of global import patterns at present is China’s forecast additional requirements.Although the mid-2013 domestic grain harvest in China apparently is marginally above last summer’s output volume, other factors point to more imports. Consumption is expanding robustly, while the quality of some domestic grain supplies is reportedly inferior, possibly necessitating an almost doubling of the imports total to 18mt in 2013/14.
Among other importers notable changes are not prominent. Middle East grain buyers are expected to reduce their total by about 5% to 45.6mt in the current crop year, while in North Africa only a marginal 1% increase to 35.1mt seems likely. European Union purchases could be down by 24%, to 12.5mt.
Richard Scott