12. 12. 2016.

The recent Brexit, US elections and China´s slowdown are some of the factors intensifying global uncertainty, which has emerged as a fresh headwind to the global economy and enough to keep the growth outlook subdued next year. The global commodities markets are currently influenced by the US dollar appreciation, Chinese demand, Middle east tensions and the climatic conditions. Record high grain stock-levels across most products seem to keep the lid on grain prices even as inflation starts to kick in in some developed countries.

Overall, we remain long term positive on grain prices. The population growth, change in diet provides long terms strong fundamentals. Nevertheless, currently record global stock levels mean prices are likely to stay low the next 6-12 months. Our latest forecast for global cereals stands at 2.6 billion MT which is slightly up versus our last projection. The main drivers are the favorable wheat and barley crops.  Planting of the Northern hemisphere 2017 winter crop is completed. In the EU planting conditions, have been good and Russia and Ukraine finally have been sowing on time after a slow start. We are experiencing a very early winter in Europe and Eastern Europe and emerging levels are below average. In the US current dryness is a worry and should be monitored.

Malting barley harvest in the Southern hemisphere is under way. Australia has harvested nearly 50% and overall harvest results confirm abundant supplies. In Argentina, excellent yields in the South are paving the way to a good crop. We are expecting a barley crop in Argentina of 3.5m MT and at least 10.4m MT in Australia.

Given the above average crops in the Southern hemisphere we are of the view that the Global Supply and Demand for 2017 looks a lot more comfortable than after the Northern Hemisphere harvest. We are assuming a global surplus of 2 row spring barley of approximately 0.4m MT. The crop 2017 European spring malting barley production is projected at 9,4m MT versus 9,2m MT in 2016. The European 6-row winter malting barley outlook for next year should also normalize. As a consequence, we should expect the global malting barley premium over feed barley to decline the next 3-4 months, until we go into the European spring planting time.

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