December 16, 2010

At the invitation of the Government of Australia, the International Grains Council held its 32nd Session in Perth, Western Australia, on 7 December, under the chairmanship of Mr Kilian Greter of Switzerland. The Council considered the latest developments in the global grains and oilseeds situation, the medium-term supply and demand outlook, recent changes in national policies and various administrative matters. On the following day members attended an International Grains Forum co-hosted by the federal Department of Agriculture, Fisheries and Forestry and Western Australia’s Department of Agriculture and Food. This was followed, on 9 December, by a tour of a major grain facility and a wheat farm.

Members noted the latest developments in the global grains* situation, especially the sharp increases in prices seen since the Council last met in June and the continuing day-to-day volatility in the main exchanges in recent months, only partly attributable to changes in market “fundamentals”. World grain supplies are expected to tighten in 2010/11 as production of wheat, maize and barley falls short of forecast consumption. However, the slowing growth of industrial use, especially of maize used for ethanol in the US, will limit the rise in grains consumption to 1.5%, down from the previous year’s 2.0%. The substantial fall in output in the CIS, especially in Russia, is expected to lead to a shift of around 30m. tons in wheat and barley exports to other suppliers, notably the US, the EU, Argentina and Australia. World trade in grains was placed at 241m. tons, marginally above the previous year. Wheat trade is set to fall in 2010/11 but this will likely be offset by increased maize shipments. Having risen by 120m. tons in the previous three years, global carryover stocks of grain in 2010/11 are expected to decline by some 60m. tons, half of this due to tightening maize supplies. As to the outlook for 2011/12, the global wheat area is projected to increase by 2%, partly in response to higher prices but also reflecting reduced abandonment in Canada and Russia after this year’s extreme summer weather conditions. The area likely to be planted to maize for the next US crop will crucially depend on the price relationship with soyabeans.

The Council also examined the Secretariat’s latest five-year supply and demand projections which, for the first time, included rice. For grains (excluding rice) it was noted that despite recent crop problems, grain availabilities are actually higher than forecast a year ago. However, consumption projections are also lifted, and stocks are expected to show some further decline from those forecast at the end of 2010/11. Maize supplies, in particular, are likely to tighten. An average annual rise of 2% in world trade in grains is projected in the years to 2015/16. With regard to rice, world supplies and demand are expected to remain broadly in balance over this period, with yield improvements likely to raise output and with consumption rising in line with population. World stocks are projected to increase slightly over the period, and trade is expected to increase by some 5m. tons, driven mainly by demand from Asia and Africa.

Members took particular note of this year’s unusual conditions in Australia. Although wheat production is officially placed at a record, a severe drought in Western Australia had resulted in sharply reduced yields, while in eastern states excessive rains will lead to considerable downgrading of the crop.

The Council received progress reports from the Secretariat on its economic work programme and on various administrative matters. It was agreed that certain aspects of the Grains  Trade Convention, 1995 should be reviewed with the aim of making any necessary changes to improve its effectiveness and scope. Members welcomed the Kingdom of Saudi Arabia to the Council, having acceded** to the Grains Trade Convention with effect from 1 September 2010. The Government of Australia was warmly thanked by members for hosting the Perth meetings and associated events and the Council also expressed its appreciation to the Department of Agriculture and Food of Western Australia.

The International Grains Forum on 8 December, also in Perth, co-hosted by the Australian Government and the Department of Agriculture of Western Australia, was attended by some 200 participants representing both the industry and governments. Following an opening address by Senator the Hon. Joe Ludwig, Australian Government Minister for Agriculture, Fisheries and Forestry, ten international and national speakers provided a range of perspectives on the main issues facing the global grains economy as well as on world food security concerns.

* Wheat and coarse grains
** As approved by the Council in August 2010 and subject to completing the formal accession procedures

Website: http://www.igc.org.uk

Published: December 16, 2010