Washington, DC, USA
December 17, 2009

The International Grains Council (IGC) met in London on 10 December under the chairmanship of Mr Matthew Koval, Minister-Counsellor (Agriculture), Australian Mission to the European Union, Brussels. Members examined the current world grains situation, exchanged information on national policy developments and, in an informal Round Table, discussed how the extreme grain price volatility seen in 2007 and 2008 had affected retail prices of bread and other key food products.

The Council noted that world grain* stocks were expected to increase further at the end of 2009/10, to 373m. tons, mainly resulting from more ample wheat supplies. The outcome of the global maize harvest would depend on southern hemisphere crops early in 2010, plantings of which had been reduced, but this year’s big rise in US output was offset by marked falls in China and the EU. For 2010/11, a slight reduction in the total wheat area was forecast. With an assumed return to average yields following the highs seen in 2008 and 2009, this was expected to result in a crop of 645m. tons, 3.5% lower than the past year’s, likely leading to a minor decline in world stocks. World trade in wheat in 2010/11 was forecast to be only slightly smaller than the estimate for the current year. The Council also examined the factors likely to affect supply and demand in the next five years. It noted that grain availabilities were currently more ample than forecast a year ago, with the Secretariat assuming that output would rise by 1.5% annually to 2014/15. Improved economic activity should boost grain demand but a slowdown in the expansion of the ethanol sector may contain growth. Feed demand was expected to increase, although this would be affected by the increased use of industrial co-products such as distillers dried grains, as well as oilseed meals. Global stocks were projected to recede, mainly because of tightening maize inventories. World trade in grains was expected to rise by 2% annually.

Although prices of most grains had returned to the levels seen before the 2007/08 surge, markets were still volatile. Rice export prices remained above their 2007 levels, and had recently again climbed higher. This was attributed to heavy buying activity in Asia. However, total supplies were seen as adequate. World trade in 2010 was projected to rise to 29.6m. tons, up from an estimated 28.2m. in the current year, with imports by the Philippines, in particular, expected to increase. This year’s poor main rice harvest in India is likely to result in a shift in use to wheat, which is in ample supply. Members of the Council also reviewed the global oilseeds situation, with another year of very big purchases by China helping to lift world trade in soyabeans in 2009/10 to a record 78.0m. tons (76.8m.). Shipments of soyameal were also higher but reduced imports by the EU and China would lead to a fall in rapeseed/canola trade.

The Council reviewed progress with the Secretariat’s current economic work programme, noting that considerable progress was being made with expanding its information systems for rice and oilseeds. In a Round Table discussion following the Session, a panel of representatives** from the milling and baking industries in South Africa, the United States and the EU exchanged views on the relationship between grain prices and the retail prices of bread and other key food products during the 2007-08 price surge. This was a complex topic as the structures of milling and baking industries, and retailing systems, differed considerably among individual countries. The price transmission appeared most direct in lower-income countries where other food product costs, including marketing, transportation and packaging, were proportionally smaller.

Members of the Council agreed that the next Session would be held on 7 June 2010, to be followed by the IGC Grains Conference on 8 June. They warmly welcomed the Chairman’s invitation, on behalf of his authorities, to hold the Council’s December 2010 Session in Australia.

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

Published: December 17, 2009