Price of rice could increase suddenly in 2017, Informa’s Agribusiness Intelligence vertical predicts

FacebooktwitterredditpinterestlinkedinmailFacebooktwitterredditpinterestlinkedinmail

Informa’s Agribusiness Intelligence vertical is predicting improved weather conditions will lead to increased production of rice worldwide in 2017, but consumption will slightly outstrip supplies and potentially lead to increased wholesale prices. Strong production in the US and Russia will mean wheat output will increase by 4 million tonnes in 2017 to match increased demand, but wheat will be replaced by cheaper foodstuffs in the animal feed market. Informa’s Agribusiness Intelligence vertical also predicts soybeans will recover from drought to see strong growth in 2017, leading the charge for growth in the wider oilseed category.

Informa’s Agribusiness Intelligence vertical, the leading provider of news, data, analysis and forecasts across the agricultural and commodities value chain, has outlined its predictions for the grains and oilseeds commodities market alongside others in its Agribusiness Annual 2017 report due to be published in January 2017. The Annual shows global commodities will paint a varied picture in 2017. This will be largely determined by weather, geopolitical changes in the US, EU and Southeast Asia while changing consumer demands and the need to supply a growing meat industry will continue to affect global commodities.

Key findings include:

  • Rice – Global rice production will exceed 2016 by 9 million tonnes in 2017 and good weather conditions means supplies are marginally larger going into 2017 than at the beginning of 2016. Growth in consumption is expected to outpace the increase in supplies, which could lead to price increases
  • Wheat – Global wheat output likely will increase by about 3 million tonnes in the 2016/17 marketing year driven by increased production from the US and Russia, while total usage is expected to increase by about 20 million tonnes. Total production and consumption will even out at around 720 million tonnes respectively. Global stocks for 2017 will be 4 million tonnes larger than in the prior year and ending stocks are expected to rise again by the end of the marketing year 
  • Oilseeds – Recovery from drought in South America and a record year for output in the US means global soybean output is forecast to rise by about 8% to just over 330 million tonnes by the end of the 2016/17 global marketing year. Total world oilseed production (including palm, rapeseed and peanuts) is expected to rebound by about 6% by the end of 2016/17 
  • Coarse grains / Animal feed – Greater consumption of meat worldwide is driving feed demand. While wheat will still form a large part of the coarse grain market, there will be heavy competition from other low-priced feedstuffs in 2017. Corn is expected to have a healthy rebound in production in 2017 in countries like Argentina following unsettled weather and export taxes in 2016

Don Riffe, senior vice president for Informa Economics IEG, concludes: “Across the globe production of grains and oilseeds are on the rise, but market segmentation and quality issues in specific regions is creating an uncertain outlook for producers and traders worldwide. It also remains unclear how the election of Trump will affect the import and export of commodities in the US market, while the potential for a hard or soft Brexit has introduced more speculation in the European market. The agricultural industry should prepare for moderate growth in grains and oilseeds, but stakeholders should arm themselves with up to the hour information to better handle sudden geopolitical changes, weather events or other market factors outside of their control.”