world wheat market in 2014/15 - cotrisa · 2019. 5. 19. · world wheat market in 2014/15 at 192.3...
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World Wheat Market in 2014/15
World Wheat Market in 2014/15
Abdolreza Abbassian Senior Economist, FAO
AMIS Secretary [email protected]
Primer Taller Internacional
de Intercambio de Experiencias sobre
6 November 2014
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World Wheat Market in 2014/15
Presentation Outline
• Brief review of recent developments in international food prices
• Global supply and demand outlook for wheat in 2014/15
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World Wheat Market in 2014/15
Food: Long-term price movements
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World Wheat Market in 2014/15
• At 192.3 points, the FAO Food Price Index in October is down marginally from September - lowest level in four years!
• The Index started to decline since March- longest period of continuous falls since the late 1990s
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World Wheat Market in 2014/15
• Cereals unchanged from Sept. but down 9% from Oct. 2013. Wheat and maize were up slightly - rice lower.
• Vegetable Oil gained 1%, supported by firmer palm oil quotations
• Dairy lost almost 2% - down over 26% from last year
• Meat fell 1% but still close to historical highs
• Sugar rose more than 4% after steep declines in previous months
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World Wheat Market in 2014/15
Cereal supply and demand
At 2 522mt, world cereal production in 2014 would fractionally decline from the 2013 peak Global cereal utilization in 2014/15 to increase by 1.7%. Feed use, to expand by 2.6% Stocks to reach 624.7mt, up 8% from the start of the season and highest in 15 years
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World Wheat Market in 2014/15
Global Wheat Market in 2014/15
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World Wheat Market in 2014/15
Major Crops: conditions in key producing countries (as of Oct. 28th)
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World Wheat Market in 2014/15
Wheat conditions in major producing countries (as of Oct. 28th)
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World Wheat Market in 2014/15
World Wheat Supply and Demand
• Global wheat production in 2014 is forecast at 722.6mt, a marginal increase from the 2013 record output
• World wheat inventories are forecast to reach 192.2mt by the end of seasons in 2015, their highest level since 2003
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World Wheat Market in 2014/15
Second year of record wheat production
• Record crop thanks to near perfect weather conditions
• But quality not so good due to wet weather at harvesting in North America and Western Europe
Data as of 6 Nov. 2014
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World Wheat Market in 2014/15
Milling wheat against feed wheat: quality matters!
Protein
gap
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World Wheat Market in 2014/15
Wheat utilization: feed use to increase in 2014/15, mostly in the EU because of large supplies
Wheat stocks: higher stocks this season in nearly all major producers but Canada
Wheat stock-to-use ratio increases to 26.9% in 2014/15 – highest in five years
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World Wheat Market in 2014/15
Wheat in Latin America and Caribbean
Production (3-year-average) Chile S&D Balance
Good crop
prospects for
2014 after two
years of below
average
production
A bumper crop
thanks to over
20% expansion in
plantings – 10-
year high
production
Higher
production in
2014due to
increase in
plantings – but
still below 5-
year average
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World Wheat Market in 2014/15
Lower wheat imports in 2014/15 (mostly in Egypt, Morocco, Tunisia, Brazil and Mexico)
Argentina, Russia and Ukraine export more but sharp falls in exports expected in the US and EU
Global Wheat Trade
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World Wheat Market in 2014/15
Wheat trade in Latin America and Caribbean
Major Importers
(July/June)
Major Exporters (July/June)
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World Wheat Market in 2014/15
15
20
25
30
35
40
45
50
55
60
2011 values 2012 values 2013 values 2014 values
US
Wh
eat
Exp
ort
Pric
es
Wh
eat
futu
res (
March
co
ntr
act)
Wheat Historical Volatility (30D)
Wheat Implied Volatility*
Wheat prices: lower and more stable
* Show the level of expected future volatility embedded in the option premiums observed in the CBOT’s options on futures markets.
5
15
25
35
45
55
65
75
85
2008 values 2012 values 2013 values 2014 values
Normal
range
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World Wheat Market in 2014/15
Forward Curves: Back to normal (upward sloping or Contango) suggesting ample supply situation this season – buyers to take advantage of cheap wheat & maize nearby availability!
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World Wheat Market in 2014/15
CFTC Commitment of Traders - Major Categories Net Length as % of Open Interest (28/10/14)
Managed money decreasing its net short wheat position
Managed money increasing its net long maize position
-40%
-20%
0%
20%
Okt 13 Dez 13 Feb 14 Apr 14 Jun 14 Aug 14 Okt 14
Commercials Swap Positions Managed Money
Sh
ort
(so
ld)
Lon
g (
bo
ug
ht)
Wheat
-40%
-20%
0%
20%
Okt.13 Dez.13 Feb.14 Apr.14 Jun.14 Aug.14 Okt.14
Commercials Swap Positions Managed Money
Maize
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World Wheat Market in 2014/15
Beyond the Fundamentals
http://www.amis-outlook.org/indicators/prices/en/
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World Wheat Market in 2014/15
Sliding currencies: Ukrainian Hryvnia (UAH) and Russian Rubles(RUB) to USD
40
50
60
70
80
90
100
110
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14
RUB UAH
-37%
- 23%
January =100
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World Wheat Market in 2014/15
Uncertainties ahead • Weather/plantings
– We had exceptionally good weather conditions in 2014 so could a return to “normal” weather result in lower production in 2015?
– Prices are well below previous years, will this affect 2015 plantings as farmers could shift to other (more profitable) crops?
• Geopolitical risks
– How will continued instability in the Middle-East and North Africa affect farm sectors and trade flows?
– Would accessing credits and lending constraints hamper plantings/yields in Ukraine and Russia?
• Economic conditions, exchange rates, oil price, etc.…
– Continued uncertainties over the health of world financial/economic systems
– Past periods of strong dollar corresponded to periods of falling commodity prices- could this trend continue? Impacts on emerging markets?
– Sharp decline in oil prices over the past few months - can all oil exporting countries weather the fall in their oil revenues?
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World Wheat Market in 2014/15
• Supply: Good
• Demand: Stable (food, feed and industrial use)
• Trade: Contracting (in spite of lower prices)
• Stocks: Increasing to multi-year highs
• Prices: below last year
2014/15 Market Summary
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World Wheat Market in 2014/15
More information in… Biannual Report
Monthly Report
On-line Price and Cereal S&D reports Monthly updates http://www.fao.org/worldfoodsituation