Futures Close Report: 25th May 2017

Australia’s grain exports have shot to record volumes this year as bumper crops push down prices; wheat, canola(OSR) and barley exports have been over 60 percent higher than normal over the first five months of 2017, at 17.2 million tonnes. The country’s 2016/17 wheat production, at 35.13 million tonnes, was around 17 percent more than the previous record of 29.6 million tonnes set in 2011/12. Barley output was 25 percent above the prior record at 13 million tonnes, while canola production of 4.1 million tonnes was 1 percent shy of an all-time high. In the second half of 2017, Australian wheat will likely face stiff competition if harvest aspirations are realised from the Black Sea region as Russia and Ukraine seek to offload their output.

The International Grains Council raised its forecast for global grains consumption for 2017/18 on Thursday, signalling a bigger drawdown of world stocks than previously expected.  The IGC, in its monthly report, revised its global grains consumption estimate for 2017/18 up by 7 million tonnes to 2.086 billion tonnes, just below the 2.087 billion forecast for 2016/17.  It maintained its 2017/18 corn production forecast at 1.026 billion tonnes, down from 1.065 billion in 2016/17. Wheat output was also unchanged at 736 million tonnes, down from 754 million in 2016/17.   IGC also raised its soybean crop forecast for 2016/17 by 5 million tonnes to a record of 350 million tonnes due to better yields in South America.

China’s crushing margins for soybeans fell to nine-month lows this week as soymeal stocks rose to their highest since mid-2012 amid sluggish end-user demand, pulling prices for the livestock feed to their lowest in a year.