Global Feed Markets: November - December 2012

Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom.All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2010 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872

Digital Re-print - November | December 2012

Global Feed Markets: November - December 2012

www.gfmt.co.uk

GLOBAL GRAIN & FEED MARKETS

Every issue GFMT’s market analyst John Buckley reviews world trading conditions which are impacting the full range of

commodities used in food and feed production. His observations will inf luence your decision-making.

Grain and feed

markets are also

being restrained

by ‘macro’ factors

- the ongoing Euro-

zone crisis, joined

now by constant

talk of the US

economy tumbling

off the ‘fiscal

clifff’ in the New

Year. Along with

China’s prospects

for slower growth,

this continues to

encourage fears of

global economic

recession turning

into depression.

THE past two months have been a roller coaster ride for the grain and feed raw material markets. In Europe, wheat prices rose sharply as this year’s

smaller crop continued to disappear too fast for comfort into export channels as Russian and Ukrainian supplies dwindled and the Arab world stocked up. Prices also responded to unhelpful harvest weather threatening Australian and Argentine crop yields and quality, by dry weather plaguing the barely sown US hard red winter crop and far too much rain holding up planting of next year’s French and UK crops. Amid the perception of ever tightening world wheat output and stocks, frisky US futures markets helped pull European milling wheat futures to their highest prices since February last year. With its own set of unusually poor quality problems, the London feed wheat contract went one better still and traded its highest prices ever.

Despite being braced for further unwelcome

data from the US Department of Agriculture’s monthly US and global grain and oilseed crop updates, consumers finally had some better news in November. USDA came out with bigger than expected US maize and soyabean crop estimates, raising rather than lowering its seasonal ending stock forecasts for both commodities (soya quite substantially). It also made only minor cuts in world wheat output and – with a signif icant cut in its consumption forecast – was actually able to raise ending stocks for this grain.

In response, US markets for wheat, maize and soyabeans all fell to multi-month lows while forward futures months for the latter two markets continued to display big discounts. All this was at odds with some bullish views on forward prices from some of the big banks at last month’s Global Grain Conference, especially for maize.

‘Stale’ bulls may still argue that the USDA is too optimistic on some of its crop forecasts – chief ly those for South American maize and

Supplies less tight than expected?

Grain&feed millinG technoloGy30 | november - december 2012

GLOBAL GRAIN & FEED MARKETS

Every issue GFMT’s market analyst John Buckley reviews world trading conditions which are impacting the full range of

commodities used in food and feed production. His observations will inf luence your decision-making.

Grain and feed

markets are also

being restrained

by ‘macro’ factors

- the ongoing Euro-

zone crisis, joined

now by constant

talk of the US

economy tumbling

off the ‘fiscal

clifff’ in the New

Year. Along with

China’s prospects

for slower growth,

this continues to

encourage fears of

global economic

recession turning

into depression.

THE past two months have been a roller coaster ride for the grain and feed raw material markets. In Europe, wheat prices rose sharply as this year’s

smaller crop continued to disappear too fast for comfort into export channels as Russian and Ukrainian supplies dwindled and the Arab world stocked up. Prices also responded to unhelpful harvest weather threatening Australian and Argentine crop yields and quality, by dry weather plaguing the barely sown US hard red winter crop and far too much rain holding up planting of next year’s French and UK crops. Amid the perception of ever tightening world wheat output and stocks, frisky US futures markets helped pull European milling wheat futures to their highest prices since February last year. With its own set of unusually poor quality problems, the London feed wheat contract went one better still and traded its highest prices ever.

Despite being braced for further unwelcome

data from the US Department of Agriculture’s monthly US and global grain and oilseed crop updates, consumers finally had some better news in November. USDA came out with bigger than expected US maize and soyabean crop estimates, raising rather than lowering its seasonal ending stock forecasts for both commodities (soya quite substantially). It also made only minor cuts in world wheat output and – with a signif icant cut in its consumption forecast – was actually able to raise ending stocks for this grain.

In response, US markets for wheat, maize and soyabeans all fell to multi-month lows while forward futures months for the latter two markets continued to display big discounts. All this was at odds with some bullish views on forward prices from some of the big banks at last month’s Global Grain Conference, especially for maize.

‘Stale’ bulls may still argue that the USDA is too optimistic on some of its crop forecasts – chief ly those for South American maize and

Supplies less tight than expected?

Grain&feed millinG technoloGy30 | november - december 2012

Feed Knowledge

www.gfmt.co.uk

THE GlobalMiller

turning into depression. None of this is encouraging for the food, feed and their upstream and downstream partners from the point of view of a healthy trading environment. But it may at least help keep costs anchored (not least by keeping speculators reined in).

So where might the grain and feed markets go in 2013? Will Chicago maize be trading in the latter part of the year, as futures markets suggest, 16% cheaper than now, in the low $6’s per bu or less, soyabeans 20% lower at $11/bu as US crops revive by perhaps 100m and 10m tonnes respectively? Will Latin America grow 30/35m tonnes more soyabeans than it did this year and will Russia produce 30m tonnes more wheat as its off icials recently suggested? Or will the weather again spring some nasty surprises leading to new record high costs across the board? Nobody at this stage knows and until some of these crops are seen up and running toward harvest, we can doubtless expect more price volatility into f irst half 2013.

Main commodity developments since our last reviewWheat – exports will cut EU stocks

Amid fairly brisk demand from a number of Middle Eastern and Nor th Afr ican countries, EU wheat exporters have been making the most of reduced competition from the former Soviet ‘Black Sea’ countries and consequent higher prices on the world market this autumn. For the season to date, EU export licenses are now running significantly ahead of last year’s pace, despite the current crop turning out 5.5m tonnes smaller than in 2011 (around 132m tonnes). Even with a predicted 4m tonne drop in domestic consumption, EU ending stocks next Jun 30 will be wafer thin at a forecast 9m tonnes compared with 12/19m in recent years.

Wheat prices peaked early in November when Ukraine announced it would curb sales for shipment after November with Russia, the other cheapest seller, expected to follow soon afterwards. Ukraine’s move hardly justif ied the market reaction (which didn’t last long) as the trade knew this supplier had already committed all or more than its supposed 5/5.5m tonne export surplus. Since then, various off icials have tried to put an acceptable spin on the export halt, aware that it is not only at odds with World Trade Organisation edicts but has not gone down well with Ukraine’s top customer, Egypt. At risk of having to re-source some of its

fully reflect the possibility of more normal weather, high pr ices and consequent expanded sowings bringing major crop rebounds next year - in the US itself (maize and soyabeans), in Russia and Ukraine (wheat and barley) and to a lesser extent, Western and Central Europe (all grains). Details of some of these possible scenarios are discussed in the relevant sections below.

USDA has also helped underline our argument in the last issue that grain demand cannot be guaranteed to grow at anything like the pace of recent years, or even remain stable, when costs constantly rise to record

or near record levels. That is why the world this season is expected to use over 20m tonnes each l e s s w hea t a n d m a i z e after decades o f m o s t l y relentless growth.

Grain and feed markets are also being restrained by ‘ma c r o ’ factors - the ongoing Euro-zone cr i s i s , jo ined now by cons tant t a l k of the US economy tumbling of f the ‘f iscal clifff ’ in the New Year. A long with China’s prospects for slower growth, this continues to encourage fears of global economic recession

soyabeans and, to a lesser extent Australian and Argentine wheat output. US maize production might also be reduced again when USDA does its f inal acreage count in January (generally expected to be lower – but who knows, after the upsets in its November report? There is also little doubt that the ratio of maize stocks to consumption is still at risky low levels that could easily trigger another price explosion if the past year’s long list of weather problems repeats into 2013.

However, longer term bears might reasonably claim forward futures don’t

Grain&feed millinG technoloGy32 | november - december 2012

producers, in their opinion wood pallets are not food-safe in a preparation environment. Bringing a wood pallet into a bakery could spell disaster as wood chip could easily go unnoticed in product – the health, legal and economic consequences could be immense. The same goes for transporting the finished product. Metal nails in wood pallets can easily work themselves loose and burst a bag of flour which could spoil a whole pallet load. It only takes a tiny tear to make a flour bag unsalable.

Using plastic pallets in food preparation

areas and for transporting finished product is a no brainer. The plastic pallets we recom-mend are manufactured from the highest quality food grade virgin or recycled materi-als and comply with EU safety legislations. For flour bags, a plastic pallet with an open flow-through top deck will offer the best grip but has no internal cavities where mould, dust and other contaminants can collect, so it can be easily cleaned by hand or with an automated system.

Plastic pallets are not only the most hygi-

enic type of pallet, they are also considered by many to be the safest, as there are no nails, sharp edges or splinters and no risk of loose component parts breaking free under manual lifting conditions and causing injury to operatives.

A worthwhile investmentAlthough hygiene and food safety are

key priorities for food processors and manufacturers, cost will always remain a major factor in any purchasing decision.

Grain&feed millinG technoloGy november - december 2012 | 19

FEATURE

turning into depression. None of this is encouraging for the food, feed and their upstream and downstream partners from the point of view of a healthy trading environment. But it may at least help keep costs anchored (not least by keeping speculators reined in).

So where might the grain and feed markets go in 2013? Will Chicago maize be trading in the latter part of the year, as futures markets suggest, 16% cheaper than now, in the low $6’s per bu or less, soyabeans 20% lower at $11/bu as US crops revive by perhaps 100m and 10m tonnes respectively? Will Latin America grow 30/35m tonnes more soyabeans than it did this year and will Russia produce 30m tonnes more wheat as its off icials recently suggested? Or will the weather again spring some nasty surprises leading to new record high costs across the board? Nobody at this stage knows and until some of these crops are seen up and running toward harvest, we can doubtless expect more price volatility into f irst half 2013.

Main commodity developments since our last reviewWheat – exports will cut EU stocks

Amid fairly brisk demand from a number of Middle Eastern and Nor th Afr ican countries, EU wheat exporters have been making the most of reduced competition from the former Soviet ‘Black Sea’ countries and consequent higher prices on the world market this autumn. For the season to date, EU export licenses are now running significantly ahead of last year’s pace, despite the current crop turning out 5.5m tonnes smaller than in 2011 (around 132m tonnes). Even with a predicted 4m tonne drop in domestic consumption, EU ending stocks next Jun 30 will be wafer thin at a forecast 9m tonnes compared with 12/19m in recent years.

Wheat prices peaked early in November when Ukraine announced it would curb sales for shipment after November with Russia, the other cheapest seller, expected to follow soon afterwards. Ukraine’s move hardly justif ied the market reaction (which didn’t last long) as the trade knew this supplier had already committed all or more than its supposed 5/5.5m tonne export surplus. Since then, various off icials have tried to put an acceptable spin on the export halt, aware that it is not only at odds with World Trade Organisation edicts but has not gone down well with Ukraine’s top customer, Egypt. At risk of having to re-source some of its

fully reflect the possibility of more normal weather, high pr ices and consequent expanded sowings bringing major crop rebounds next year - in the US itself (maize and soyabeans), in Russia and Ukraine (wheat and barley) and to a lesser extent, Western and Central Europe (all grains). Details of some of these possible scenarios are discussed in the relevant sections below.

USDA has also helped underline our argument in the last issue that grain demand cannot be guaranteed to grow at anything like the pace of recent years, or even remain stable, when costs constantly rise to record

or near record levels. That is why the world this season is expected to use over 20m tonnes each l e s s w hea t a n d m a i z e after decades o f m o s t l y relentless growth.

Grain and feed markets are also being restrained by ‘ma c r o ’ factors - the ongoing Euro-zone cr i s i s , jo ined now by cons tant t a l k of the US economy tumbling of f the ‘f iscal clifff ’ in the New Year. A long with China’s prospects for slower growth, this continues to encourage fears of global economic recession

soyabeans and, to a lesser extent Australian and Argentine wheat output. US maize production might also be reduced again when USDA does its f inal acreage count in January (generally expected to be lower – but who knows, after the upsets in its November report? There is also little doubt that the ratio of maize stocks to consumption is still at risky low levels that could easily trigger another price explosion if the past year’s long list of weather problems repeats into 2013.

However, longer term bears might reasonably claim forward futures don’t

Grain&feed millinG technoloGy32 | november - december 2012

some bull ish aspects to this. One is that over 55m tonnes of these are within China’s strategic reserve, so theoretically ‘off-market’ and unable to inf luence prices much (some western observers also doubt that China holds anything like this much wheat). Another 22m tonnes is held in India, much of it poorly stored and of dubious quality. Even so, what’s left in other supplying and impor ting countr ies’ stocks should be enough to

see this market through the season without price mayhem.

The main uncertainties hanging over the wheat market, which could drive prices higher, are the uncertain outcomes for some of the big exporters’ 2013 crops. Australia’s may be under 20m versus the expected 21m tonnes and is experiencing some quality problems too from difficult harvest weather. Argentina’s crop is probably over-rated by 1/1.5m mn tonnes and much of its usually good export quality breadwheat has been downgraded by rain-delayed harvests. The USA’s hard red winter wheat crop is meanwhile suffering from prolonged drought. Wheat, of course, is a tough crop with remarkable powers of recuperation. Within the US itself, drought seems to be a recurring theme in recent winters – yet the crop usually seems to come through bigger and better quality than the pessimists fear. That said, this year is undoubtedly much worse than normal, off icial surveys putting crop condition ratings at their lowest level ever. Given that HRW is the largest component of the top exporter’s foreign sales, this could emerge as a bullish factor going into 2013. On the other hand, the USA’s soft red winter crop is doing much better while it could also make up for some of the hard winter wheat losses by sowing more spring wheat.

Europe is another problem area with France and the UK both well behind on their autumn sowings. This could result in lower than expected planted areas and crops. However, Germany’s crop is in better condition while it’s also possible that the east European countries that helped pull down this year’s crop after droughts and heatwaves, could get better weather and crops next year.

At this stage, it remains possible that 2013 will bring a bigger world wheat crop but it will be many months before a reliable picture shapes up. In the meantime, wheat will remain exposed to a tight maize market and the broader need to rebuild depleted feedgrain stocks – a situation that cannot be remedied before the next US maize harvest arrives in third quarter 2013.

Ukrainian wheat elsewhere, Egypt initially took Ukraine off its list of approved suppliers at one point but re-instated it after a pledged to honour all contracts – even if that meant paying to f ind the wheat elsewhere.

Combined wheat production within the former Soviet bloc is expected to drop from last year’s 115m tonnes to 72.5m. Exports from the main three suppliers are expected to fall from 37.6m to 23m. However, the implications are less severe than in past year’s of crop shortfall, partly because the region’s carry-over stocks started out 5m tonnes higher than last year’s and, even more importantly, because world wheat import trade is also seen down this season by 14m tonnes.

World wheat export competition hasn’t gone away this season because of the Black Sea shortfall, or the accompanying declines of about 4m tonnes each expected in Australian and Argentine exports. Australian export availability of at least 19m tonnes will still be huge by historical comparison while extra supplies are seen coming from Canada’s bumper crop (which will allow 2m tonnes more exports than last year) and India (exports up from last year’s 1.7m to 7m tonnes!) The biggest exporter of all, the USA, is also expected to raise shipments by 2.5m to 30.5m tonnes and still f inish the season with a comfortable 19m tonnes of stocks – enough to expand foreign sales further still if need be. So far, the US is failing to meet its own export targets, undercut by Canada, Australia, Argentina, Europe, some residual Black Sea sales and India’s emergence as a serious competitor. These disappointing exports have been a constant drag on the US futures markets and along with the looser USDA supply f igures and a 3.6m tonne reduction in estimates of world feed wheat use, have helped drive Chicago futures prices down to four-month lows in mid-November, a reversal that eventually helped to knock EU wheat prices off their peaks too.

While an estimated 174m tonnes of wheat carryover stocks for 2012/13 is hardly tight relative to consumption needs, there are

Grain&feed millinG technoloGy november - december 2012 | 33

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4.3m lower than last year’s. Many in the trade contest the USDA’s EU demand figures, including the forecast of just 5.5m tonnes of maize imports against last season’s 7.1m. The popular range is 8-10m with one leading analyst as high as 11.5m. This would make the EU second only to Japan (15m) in the global import stakes – a development viewed on the US markets – which tend to set the world maize price trend – as a bullish factor going forward.

However, anchoring that sentiment somewhat, there has been plenty of competition in in the global maize export markets recently, chief ly from Argentina, Brazil, Ukraine and, to a lesser extent, India. Some of these origins have been regularly undercutting the US prices by $20/$40 per tonne which explains why US sales are doing so badly. In fact the lion’s share of a 2.4m tonne increase in world maize trade this season is seen going to Brazilian exports (+2m tonnes). It would not be surprising to see Brazil whittle down its fairly large stocks further to export more if the demand was there and the price right – so that US sales revival could come later than they think.

Despite weeks of rain-delayed planting, the USDA kept its South American maize crop forecasts (harvest f irst quarter 2013) unchanged on the assumption there was still time to get these crops in and achieve normal yields. However, not all analysts accept USDA’s high crop figures, especially for Argentina, which could be over-rated by anything from 2m to 6m tonnes, all of

up 500 ,000 t o n n e s o n higher y ie ld estimates (+0.3bpa), Russia’s crop up by a similar amount bu t the EU harvest revised down by 1m tonnes to just 54.7m t o n n e s – 11.5m below last year’s and t he l owe s t level for many years. Along w i t h o t he r minor changes, that aggregates a world maize c r o p o f 840m tonnes - 6 8 0 , 0 0 0 higher than in October but still almost 41m down f rom l a s t ye a r ’ s . The EU maize consumption forecast was also raised by 1.5m tonnes but remains

KEY FACTORS IN THE MONTHS AHEAD• Winter weather for the ‘Black Sea’ (CIS),

European and North American crops• Updated estimates of sown areas for N

Hemisphere winter wheat• What share will wheat take in feed

consumption in place of maize in the EU, the USA & in Far Eastern import markets?

• Where will Australian & Argentine crops settle volume – and quality - wise?

Maize prices restrainedMaize prices have been fairly ‘range-bound’

during the last two months, restrained by the bearish USDA data and a welter of negative economic news with its possible implications for meat and energy demand and, not least, by unusually poor foreign demand for US grain. The USDA and many in the trade are still expecting some sort of US export revival in the New Year, however, as intense Latin American and other competition starts to fade.

Key changes to the supply//demand data this month include the US crop going

Grain&feed millinG technoloGy34 | november - december 2012

International Association of Operative Millers10100 W. 87th Street, Suite 306Overland Park, KS 66212 USAP: +1-913-338-3377 | F: +1-913-338-3553

IAOM Correspondence Course in Flour Milling

Unit Topics Introduction to Milling and Wheat Wheat Cleaning Wheat Flour Milling Milling other Classes of Wheat, Non-flour Wheat Products, Flour and Milled Grain Product Additives Milling Other Grains Storage, Handling, Packaging and Use of Grain-based

Products Plant Management Introduction to Mill Mechanics

IAOM’s Correspondence Course in Flour Milling has been helping to educate millers for over 60 years. This recently revised edition contains a

comprehensive curriculum beginning with basic milling and grain cleaning. It then delves into the gradual reduction system, different types of grains,

storage and packaging, air usage, mechanics, management, and much more.

This 8-unit course is for the miller who wants to expand his or her knowledge of the industry in a formalized manner. Milling

supervisors around the world order this course for their employees, knowing that exposure to the material will enhance overall knowledge and performance.

Millers, speak with your supervisors about enrolling in the course. Supervisors, consider those employees whom you would like to see grow in the company and encourage them to enroll. The course is also appropriate for enriching the experience of all seasoned employees in all sections of the plant.

Per Unit Units 1-8 IAOM Member Price: $250 $1,800 Non-member Price: $325 $2,340 +shipping & handling

Language FormatsAll 8 Units are available in English

Units 1 and 2 are available in Spanish (Units 3-8 are in translation)Unit 3: Wheat Flour Milling is available in Arabic

For more information or to order online visit:

www.iaom.info

story is real in terms of human development indicators, the performance has been a cause for concern. India is way down in the Human Development Index and very high in Global Hunger Index. As per National Family Health Survey, 42.5 percent of children under the age of five are underweight and 69.5 percent anaemic. Pervasive malnutrition and under-nutrition is reported across the country. Serious calorie and protein deficiency is seen especially in rural areas. The risk that the country may rapidly move towards nutrition insecurity is real.

Given the age profile of the population (31 percent below the age of 15, and 53 per-cent below the age of 25 representing the future of India), the implications are serious. Malnutrition exerts long-term adverse effect on human health, labour productivity and general wellbeing. It is recognised that per-petual under-nutrition results in low resist-ance to infections and increased morbidity.

Versatile processing Extrusion technology is one of the most

versatile food processing techniques with wide range of applications. One of the most important applications of extrusion technol-ogy is to produce healthy and nutritious alternates /analogues to some staples. Also, extrusion technology can help in utilising low cost raw materials as well as underutilised grains to manufacture these analogues in

large quantities. One of the unique features of this tech-nology is to fortify processed food products with micro-nutrients.

As extrusion process is a high temperature short time process, it can retain the micronutrients efficiently. Some of the most promis-ing products that can allevi-ate both micronutrient and macronutrient malnutrition are, textured protein prod-ucts, lentil analogue, recon-stituted rice, snack products etc. All these products can be efficiently fortified with various micronutrients.

A variety of applications

One further advantage of this technology is to reduce the cooking time of the proc-essed products. This has an economic advantage while using these processed prod-ucts in the feeding programmes. This technol-ogy can be used to manufacture a number of processed and value added food products in large volumes. Some of the products and applications which have relevance to food

and nutrition security in India include: micro-nutrient fortification of basic commodities; manufacturing reconstituted rice; production of textured soy proteins in large volumes; manufacturing high protein snacks.

Table 2:

CategorySize

(Million Rupee)

Size (Million US$)

Growth (%)

Packaged Milk 11000 220 7

Biscuits 6500 130 17

Edible Oil 6100 122 13

Tea 3700 74 8

Savory Snacks * 2100 42 19

Confectionery 2100 42 12

Vegetable Oil 1950 39 7

Milk Food Drinks (MI Ds) 1450 29 2

Ghee (Clarified Butter) 1300 26 17

Salt 1300 26 13

Baby Foods 1100 22 1

1000 million (Indian Rupee) = 20 million US$

Source – AC Nielsen retail audit, All India (Urban + Rural), MAT Dec 2006

Grain&feed millinG technoloGy november - december 2012 | 23

GLOBAL MILLINGCONFERENCE 1st

CHENNAI, INDIA

7-9 February 2013

Safety, sustainability and food supply in milling for the 21st Century

• Raw materials - demand & supply trends    • Food & food safety    • Milling technology developments    • Nutrition & formulation    • Environment & sustainability    • Food security• Storage & transportation

Find out more at:

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Jointly organised by Assocom and Grain & Feed Milling Technology magazine

Indiathe world’s second largest market

• Raw materials - demand & supply trends    

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GMC_90x132mm.indd 1 16/10/2012 16:50

FEATURE

4.3m lower than last year’s. Many in the trade contest the USDA’s EU demand figures, including the forecast of just 5.5m tonnes of maize imports against last season’s 7.1m. The popular range is 8-10m with one leading analyst as high as 11.5m. This would make the EU second only to Japan (15m) in the global import stakes – a development viewed on the US markets – which tend to set the world maize price trend – as a bullish factor going forward.

However, anchoring that sentiment somewhat, there has been plenty of competition in in the global maize export markets recently, chief ly from Argentina, Brazil, Ukraine and, to a lesser extent, India. Some of these origins have been regularly undercutting the US prices by $20/$40 per tonne which explains why US sales are doing so badly. In fact the lion’s share of a 2.4m tonne increase in world maize trade this season is seen going to Brazilian exports (+2m tonnes). It would not be surprising to see Brazil whittle down its fairly large stocks further to export more if the demand was there and the price right – so that US sales revival could come later than they think.

Despite weeks of rain-delayed planting, the USDA kept its South American maize crop forecasts (harvest f irst quarter 2013) unchanged on the assumption there was still time to get these crops in and achieve normal yields. However, not all analysts accept USDA’s high crop figures, especially for Argentina, which could be over-rated by anything from 2m to 6m tonnes, all of

up 500 ,000 t o n n e s o n higher y ie ld estimates (+0.3bpa), Russia’s crop up by a similar amount bu t the EU harvest revised down by 1m tonnes to just 54.7m t o n n e s – 11.5m below last year’s and t he l owe s t level for many years. Along w i t h o t he r minor changes, that aggregates a world maize c r o p o f 840m tonnes - 6 8 0 , 0 0 0 higher than in October but still almost 41m down f rom l a s t ye a r ’ s . The EU maize consumption forecast was also raised by 1.5m tonnes but remains

KEY FACTORS IN THE MONTHS AHEAD• Winter weather for the ‘Black Sea’ (CIS),

European and North American crops• Updated estimates of sown areas for N

Hemisphere winter wheat• What share will wheat take in feed

consumption in place of maize in the EU, the USA & in Far Eastern import markets?

• Where will Australian & Argentine crops settle volume – and quality - wise?

Maize prices restrainedMaize prices have been fairly ‘range-bound’

during the last two months, restrained by the bearish USDA data and a welter of negative economic news with its possible implications for meat and energy demand and, not least, by unusually poor foreign demand for US grain. The USDA and many in the trade are still expecting some sort of US export revival in the New Year, however, as intense Latin American and other competition starts to fade.

Key changes to the supply//demand data this month include the US crop going

Grain&feed millinG technoloGy34 | november - december 2012

International Association of Operative Millers10100 W. 87th Street, Suite 306Overland Park, KS 66212 USAP: +1-913-338-3377 | F: +1-913-338-3553

IAOM Correspondence Course in Flour Milling

Unit Topics Introduction to Milling and Wheat Wheat Cleaning Wheat Flour Milling Milling other Classes of Wheat, Non-flour Wheat Products, Flour and Milled Grain Product Additives Milling Other Grains Storage, Handling, Packaging and Use of Grain-based

Products Plant Management Introduction to Mill Mechanics

IAOM’s Correspondence Course in Flour Milling has been helping to educate millers for over 60 years. This recently revised edition contains a

comprehensive curriculum beginning with basic milling and grain cleaning. It then delves into the gradual reduction system, different types of grains,

storage and packaging, air usage, mechanics, management, and much more.

This 8-unit course is for the miller who wants to expand his or her knowledge of the industry in a formalized manner. Milling

supervisors around the world order this course for their employees, knowing that exposure to the material will enhance overall knowledge and performance.

Millers, speak with your supervisors about enrolling in the course. Supervisors, consider those employees whom you would like to see grow in the company and encourage them to enroll. The course is also appropriate for enriching the experience of all seasoned employees in all sections of the plant.

Per Unit Units 1-8 IAOM Member Price: $250 $1,800 Non-member Price: $325 $2,340 +shipping & handling

Language FormatsAll 8 Units are available in English

Units 1 and 2 are available in Spanish (Units 3-8 are in translation)Unit 3: Wheat Flour Milling is available in Arabic

For more information or to order online visit:

www.iaom.info

COMMODITIESgrain next year? This factor will continue to dominate others influencing grain costs right through to harvest in 3rd quarter 2013. At this stage it could be under or over-reflected in weaker forward futures.

• Competi t ion from Lat in Amer ica , former Soviet countries and India has cut demand for US maize. So has availability of Australian & Indian feedwheat. But will Argentina’s next crop fall short of the record forecasts?

• How much corn will the EU use/import in 2013 to meet its own feedgrain crop shortfalls? - probably more than expected by USDA

• Will US corn ethanol use revive after dropping in 2012?

• Will China need more or less maize imports next year and will suppliers like South America and Ukraine benefit more from this demand than the USA?

• Will global economic recession continue to curb expansion in meat/consumption, help cap feed grain demand & anchor grain and oilseed costs?

KEY FACTORS IN THE MONTHS AHEAD• Has the US 2012 maize crop gone from

under to over-rated? • Will farmers there sow a large area again

and will weather favour normal yields – perhaps recovering 100m tonnes more

which would have to come off exports. Also, these crops will likely be harvested later than normal in a year when tighter US supplies need this seasonal supply top up on time.

Overall, then, maize supplies are still fair from comfortable ahead of nine months of unknown growing weather. So again, this is a market that could go either way.

Grain&feed millinG technoloGy november - december 2012 | 35

under much better conditions than last year, laying the foundations for bigger 2013 crops. Among the top EU producers, rain has held up and may limit sowings in France and the UK but Germany is looking more promising and maybe the East European countries, who lost yield to drought and heat this year, will get better weather next year. Largest exporter Canada’s 2013 crop is larfgely spring sown so an unknown quantity at this stage but it would not be surprising to see farmers there sow a big acreage again at these still high prices.

World sunflower seed production under-performed even more than rapeseed this year, dropping 5.4m tonnes or 13% to just 34.8m tonnes after disappointing crops in Europe and the FSU countries.

With little change in production of the other major oilmeals – groundnut, cottonseed etc – it is clear that most of the increase in global consumption will have to be fed by soya. It should also be noteds that carryover stocks of the alternative oilseeds will be unusually low at the start of next season, especially for sunflowers and rapeseed, the latter at a nine-year low. So even if these crops do rebound nextyear, supplies will probably not be so flush for yet another year. Even so, if the optimistic soya crop predictions do materialise, that should be enough to hold costs down in the protein sector.

KEY FACTORS IN THE MONTHS AHEAD • South American crop weather and f inal

sowing, timing of their harvests• The brisk pace of global soya demand

makes it vital that next year’s production forecasts do pan out

• Key to demand is top importer China. Is soya meal use there slowing somewhat as off icials suggest are will it continue to surprise to the upside?

• Will EU/CIS rapeseed and sunflowerseed and Canadian canola crops perform better after a disappointing 2013, easing the onus a bit on soya supplies?

• How much will the US plant in the spring? What weather will crops get in 2013?

new record 268m in the full 2012/13 season. Supplies could get another top up later in the year if the US gets a return to normal yields for its summer 2013 crop. Even on unchanged acreage, some analysts think could expand its next crop by as much as 10m tonnes, back to the peak levels of 2009 and 2010, assuming weather does normalise.

In soya meal equivalent the increase in 2012/13 supplies equals about 22m tonnes. However, USDA expects world crush to increase by only 4.5m, the rest of the extra beans going to food use and stocks.

On paper, this suggests adequate beans to meet an expected increase of about 4m tonnes in world soya meal demand spread over China (+3.6m), Europe (+0.6m), Brazil (+0.4m) offset by a near 2m drop in US consumption. If the US futures markets are right, soya meal should be about 10% cheaper this time next year although, if the US crop does rebound, the drop will be a lot bigger than that.

However, there are some mitigating bullish factors in the current season’s supply and price outlook for oilmeals, One is the poor performance of other oilseed crops this year. After two years of stagnating production, the world rapeseed crop is expected to drop by about 1.6m tonnes to a four year low of 59.3m, after disappointing yields in Europe, the former Soviet Union and especially Canada, where the harvest has come in about 2m tonnes under an earlier expected record level. Current pointers suggest the FSU countries are sowing more winter rape

• Speculators’ enthusiasm to exploit any maize crop weather problemsProteins/oilmeals - demand to mop up

extra soya?US soyabean and meal prices fell to f ive-

month lows in November after the USDA raised its US crop forecast by 3m to 80.9m tonnes. That was not only more than expected but a remarkable shift from the view just two months ago, when USDA was expecting the Midwest summer drought – possibly the worst since the 1930s - to cut the crop to just 72m tonnes (some traders even less).

The USDA also surprised the markets by making no cuts were to its crop forecasts for Latin America (harvested first quarter 2013) where Argentine sowing has been held up by wet weather and parts of of Brazil have been getting too little rain. Many private trade estimates are lower than the USDA’s but not all. The crops are still going in as we go to press and the weather could look up in time to keep sowing roughly on target. Argentina might even so a bit more than expected as farmers giver up on corn planting which has to be completed earlier. However, later than normal sowing could mean the crops arrive a bit later than usual.

Two months ago, that would have made a lot more difference as US supplies looked in serious danger of running out long before then end of its Sep/Aug marketing year. Now, with the larger US supplies, that looks less likely.

If all goes well, world soyabean output should expand by about 28m tonnes to a

Grain&feed millinG technoloGy36 | november - december 2012

under much better conditions than last year, laying the foundations for bigger 2013 crops. Among the top EU producers, rain has held up and may limit sowings in France and the UK but Germany is looking more promising and maybe the East European countries, who lost yield to drought and heat this year, will get better weather next year. Largest exporter Canada’s 2013 crop is larfgely spring sown so an unknown quantity at this stage but it would not be surprising to see farmers there sow a big acreage again at these still high prices.

World sunflower seed production under-performed even more than rapeseed this year, dropping 5.4m tonnes or 13% to just 34.8m tonnes after disappointing crops in Europe and the FSU countries.

With little change in production of the other major oilmeals – groundnut, cottonseed etc – it is clear that most of the increase in global consumption will have to be fed by soya. It should also be noteds that carryover stocks of the alternative oilseeds will be unusually low at the start of next season, especially for sunflowers and rapeseed, the latter at a nine-year low. So even if these crops do rebound nextyear, supplies will probably not be so flush for yet another year. Even so, if the optimistic soya crop predictions do materialise, that should be enough to hold costs down in the protein sector.

KEY FACTORS IN THE MONTHS AHEAD • South American crop weather and f inal

sowing, timing of their harvests• The brisk pace of global soya demand

makes it vital that next year’s production forecasts do pan out

• Key to demand is top importer China. Is soya meal use there slowing somewhat as off icials suggest are will it continue to surprise to the upside?

• Will EU/CIS rapeseed and sunflowerseed and Canadian canola crops perform better after a disappointing 2013, easing the onus a bit on soya supplies?

• How much will the US plant in the spring? What weather will crops get in 2013?

new record 268m in the full 2012/13 season. Supplies could get another top up later in the year if the US gets a return to normal yields for its summer 2013 crop. Even on unchanged acreage, some analysts think could expand its next crop by as much as 10m tonnes, back to the peak levels of 2009 and 2010, assuming weather does normalise.

In soya meal equivalent the increase in 2012/13 supplies equals about 22m tonnes. However, USDA expects world crush to increase by only 4.5m, the rest of the extra beans going to food use and stocks.

On paper, this suggests adequate beans to meet an expected increase of about 4m tonnes in world soya meal demand spread over China (+3.6m), Europe (+0.6m), Brazil (+0.4m) offset by a near 2m drop in US consumption. If the US futures markets are right, soya meal should be about 10% cheaper this time next year although, if the US crop does rebound, the drop will be a lot bigger than that.

However, there are some mitigating bullish factors in the current season’s supply and price outlook for oilmeals, One is the poor performance of other oilseed crops this year. After two years of stagnating production, the world rapeseed crop is expected to drop by about 1.6m tonnes to a four year low of 59.3m, after disappointing yields in Europe, the former Soviet Union and especially Canada, where the harvest has come in about 2m tonnes under an earlier expected record level. Current pointers suggest the FSU countries are sowing more winter rape

• Speculators’ enthusiasm to exploit any maize crop weather problemsProteins/oilmeals - demand to mop up

extra soya?US soyabean and meal prices fell to f ive-

month lows in November after the USDA raised its US crop forecast by 3m to 80.9m tonnes. That was not only more than expected but a remarkable shift from the view just two months ago, when USDA was expecting the Midwest summer drought – possibly the worst since the 1930s - to cut the crop to just 72m tonnes (some traders even less).

The USDA also surprised the markets by making no cuts were to its crop forecasts for Latin America (harvested first quarter 2013) where Argentine sowing has been held up by wet weather and parts of of Brazil have been getting too little rain. Many private trade estimates are lower than the USDA’s but not all. The crops are still going in as we go to press and the weather could look up in time to keep sowing roughly on target. Argentina might even so a bit more than expected as farmers giver up on corn planting which has to be completed earlier. However, later than normal sowing could mean the crops arrive a bit later than usual.

Two months ago, that would have made a lot more difference as US supplies looked in serious danger of running out long before then end of its Sep/Aug marketing year. Now, with the larger US supplies, that looks less likely.

If all goes well, world soyabean output should expand by about 28m tonnes to a

Grain&feed millinG technoloGy36 | november - december 2012

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