Market Situation and Outlook 2013/14 Wheat & Maize · 2013. 10. 8. · Wheat Historical Volatility...

10/8/2013

1

4th Session of the AMIS Food Market Information Group, 1-2 October 2013

Market Situation and Outlook 2013/14

Wheat & Maize

FOURTH SESSION OF THE AMIS

GLOBAL FOOD MARKET INFORMATION GROUP

ROME, FAO HEADQUARTERS

1-2 October 2013

1


Prices Falling!

10/8/2013

2


Energy Markets

3

Brent Crude vs West Texas Intermediate

Source: http://en.wikipedia.org/wiki/File:Brent_Crude_vs_West_Texas_Intermediate.png AMIS website - http://www.amis-outlook.org/

In September: Sharp fall in

ethanol prices, to a 3-year low

triggered by sell of in December

maize (followed by upward

revision of the USDA to this

year’s maize production), sell-off

in gasoline prices and sharp

increase in ethanol production.

Ethanol prices at near 3-year low

After reaching a 2-year high in late August,

WTI prices fell to $103 (Brent to $109) a

barrel by late September, due to reduced

supply concerns as chance of military

escalations over Syria subsided. Prices also

fell on expectations that the US budget

impasse could hurt economic growth in the

US.


Exchange Rate Movements Selected currencies against the US Dollar (January 2013=100)

Sources: Reuters and Bloomberg

95

100

105

110

115

120

125

130

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

India South Africa Indonesia Turkey

In September, US Federal Reserve decision

to maintain it pace of monetary stimulus,

pushed up stock markets and currencies in

emerging markets as long-term US interest

rates fell, making higher-yielding

investments in the EM more attractive.

109

114

119

124

2-Sep 9-Sep 16-Sep 23-Sep

4

10/8/2013

3


Global Wheat Situation and Outlook

5


Wheat Production up 6.8% in 2013 (record)

World Production and Area Leading Wheat Producers 1/

Source: FAO/GIEWS-CBS

6

10/8/2013

4


AMIS website- http://www.amis-outlook.org/

Major Exporters’ stocks-to-

disappearance ratio dropping to

12.6% from 13.5% in 2012/13. The

decline in the US wheat production

(for 4th consecutive year) lead to

lower ending stocks in the US.

Inventories could decline also in

other major exporters, except in the

EU.

Wheat export supplies in 2013/14

tighter than in 2012/13

7


Wheat Trade to Reach 141mt in 2013/14, up 2%

Imports by Region Major Exporters

Imports by China to rise by at

least 3mt (to 7.5mt) – could

increase even further! Higher

imports also by Egypt, Kenya,

Pakistan, Saudi Arabia and

Tunisia.


8

10/8/2013

5


Wheat Prices

At least 20% down Y/Y

December CBOT Wheat Futures

9


“Increasing confidence that world wheat supplies would be

adequate in 2013/14 put downward pressure on prices

during the first part of September, along with declines in

other grains and oilseeds, especially maize. However, falls

were limited by solid export demand, concerns about lower

export potential in Argentina and suggestions that China

would need further imports.”Source- IGC for AMIS Market Monitor- No12


High (record) Prices in Argentina and China


190

240

290

340

390

440

490

Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13

China Zhengzhou Argentina MATba USA CBOT

USD/tonnes

Higher prices

in Argentina

discourage

exports – too

much exports

in 2012/13

despite a low

production.

Higher prices

in China

encourage

imports

10

10/8/2013

6


Price Volatility (a measure of risk):

Much lower than in recent years!

10

25

40

55

70

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

2008 Values 2012 Values 2013 Values

Wheat Historical Volatility (HV, 30D) for December

18

28

38

48

58

68

78



Wheat Implied Volatility (IV)* for

Forward Curve

Contango- upward sloping

(normal) prices signal

producers and

warehouses to store

surpluses and buyers to

take advantage of cheap

nearby grain availability

* Show the level of expected future volatility embedded in

the option premiums observed in the CBOT’s options on

futures markets.

11


230

240

250

260

270

27 Sep 2013 30 Aug 2013 31 Jul 2013

USD per tonne

% %


Latest Wheat Outlook in Summary:From AMIS Market Monitor, October 2013

12

AMIS website at- http://www.amis-outlook.org/amis-monitoring/monthly-report/

10/8/2013

7


Global Maize (Corn) Situation and Outlook

13


Maize Production up 12.7% to a new record

World Maize Production and Area Production: Leading Maize Producers 1/

14


10/8/2013

8



Most of the increase would reflect

higher maize inventories among

major exporters, especially in the

United States, where a recovery in

maize production in 2013 could boost

ending stocks from their historical

low level of 16.8 million tonnes to 44

million tonnes, 27 million tonnes

higher than their opening level.

Higher maize stocks are also forecast

for Brazil, China and the EU.

A sharp recovery in maize supplies

in 2012/13

15


Maize Trade to Approach 104mt in 2013/14, Up 2% and a Record

Imports by Region Major Exporters

16

The main drivers behind the

anticipated expansion in world

trade of maize are larger

imports by China, Egypt, Kenya,

Japan, Indonesia and Mexico.


10/8/2013

9


World Maize Utilization

Global feed use of maize to reach 541mt in 2013/14. To rise by 18% in the US and by 10% in

China. At 148mt, feed use of maize in China would exceed maize feed use the US for the 3rd

consecutive season .

17



http://www.startribune.com/newsgraphics/225564062.html

Maize for Ethanol fuel up 5% in the US (in 2013/14)

Maize prices coming down, could

help boost ethanol production in the

US, but what about ethanol prices?

The “Blend Wall” question: Can E15

(15% ethanol) be achieved if

gasoline consumption isn’t

increasing?

18

10/8/2013

10


December CBOT Maize Futures

Maize Prices

Down 28% Y/Y


19

“New crop supplies and prospects for a large crop in the US,

combined with good availabilities in Brazil, led to declines in

maize export prices during September. Black Sea prices were

broadly unchanged as rain-related delays tempered good crop

prospects. “

Source- IGC for AMIS Market Monitor- No12



Prices higher in China but declining in Argentina

100

150

200

250

300

350

400

450

Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13

China Dalian Argentina MATba USA CBOT

USD/tonnes

Higher prices in

China, despite a

record crop,

point to higher

import demand

this season

Lower prices in

Argentina after a

record harvest

earlier this year

boost exports

10/8/2013

11


Price Volatility (a measure of risk):

US crop uncertainty has been supportive to higher volatility

Forward Curve

15

20

25

30

35

40

45

50

55



Maize Implied Volatility for December %

10

20

30

40

50



Maize Historical Volatility (30D) for December %

Recent months were marked by exceptionally tight supply

situation (of the old maize crop), thus a sharp downward slope in

early September (backwardation). In contrast, good new crop

prospects point to a more normal outlook.

Sources: Reuters and Bloomberg21

170

190

210

27 Sep 2013 30 Aug 2013 31 Jul 2013

USD per tonne


Latest Maize Outlook in Summary:From AMIS Market Monitor, October 2013

AMIS website at- http://www.amis-outlook.org/amis-monitoring/monthly-report/

22

10/8/2013

12


More information on AMIS website

www.amis-outlook.org

Market Situation and Outlook 2013/14 Wheat & Maize · 2013. 10. 8. · Wheat Historical Volatility...

Documents

Transcript of Market Situation and Outlook 2013/14 Wheat & Maize · 2013. 10. 8. · Wheat Historical Volatility...