World Grain - April 2012 - 6

from the editor-in-chief

Mounting power of economic conditions in grains
ith the global economy continuing to reﬂect great uncertainty, it is ironic that projections of future consumption trends in grains increasingly emphasize the importance of economic conditions, mainly personal income levels. Sure, trends in population, urbanization, governmental policies and political and trade relationships all continue to affect whether consumption of grains rises, slows or even reverses. But in assessing the outlook for the near term, it is striking the degree to which the path of grain consumption is being moved by incomes and how that will come to bear on what people around the world eat. Measuring this effect is difﬁcult, but it is hugely important for the global grain business to appreciate what a major change this is from the time when it could be assumed that global grain consumption was mainly governed by supply, not demand. The economy’s effect is primarily evident in the way that feed consumption is at long last the driving force of total demand. Impacted primarily by the desire of people with increasing incomes to eat more meat and poultry, feed use has gained precedence as the main force affecting grain use. This marks the realization of expectations that have existed for decades. Students of grain markets have forecast for years that feed utilization will be front and center, eas-

ily surpassing food and other uses. For the past decade, that prospect, which constantly seemed on the verge of being realized, was interrupted by mandates in the United States creating a new outlet for grains, primarily maize, to make ethanol. Just as growth of ethanol use has slowed, income levels emerged as powerful forces, primarily in Asian leaders like China and India, but also in sub-Sahara Africa. In its recent ﬁve-year global demand projections for grain, the Secretariat of the International Grains Council (IGC) emphasizes the uncertainties surrounding the global economy. Noting how these worries increased in the past year, the IGC says it decided in the face of “signiﬁcant downside risks which could undermine global growth in the period to 2016-17” to assume that these problems will not worsen. That assumption lies behind the forecast that feed use of grains ﬁve years from now will be up 10% from 2011-12. In contrast, the gain in food use of grains in the same period is projected at 4.6%. The Council sees industrial grain use gains of 13.6% in the same ﬁve years, but this is much slower than in the prior half-decade. According to the IGC, diversifying diets, particularly favoring consumption of meat and poultry, relate directly to income levels. At the same time, this slows the rise

in the direct use of grains for food. Within wheat speciﬁcally, these factors show in the prospect that food use of wheat in 2016-17 will be up 4% from the present level, at 482 million tonnes, while feed use of wheat will expand 10% in the same period, to 136 million tonnes. Wheat’s share of direct food use of grains has held constant at 74% in recent years, and there’s no change from that likely in the next ﬁve years, the IGC indicates. Global economic conditions also play a key role in boosting export trade. For all grains, the IGC forecasts exports in 2016-17 rising 9% from ﬁve years earlier to a new record of 273 million tonnes. Wheat is likely to gain 5%, to 138 million tonnes, a new peak. Global maize exports are projected to exceed 100 million tonnes for the ﬁrst time, reaching 107 million, which is up an impressive 15% from 2011-12. Growing incomes are credited with causing expanded demand for wheat-based foods in Asia and Africa as well as larger imports of maize for feed in Paciﬁc Asia, mainly China. While expanding demand from rising incomes makes a positive force for the global grain business, it must also be recognized based on the past three years how this factor ﬂuctuates. Morton I. Sosland Editor-in-chief

Chairman Charles Sosland Publisher/Managing Director Mark Cornwell Director of Advertising Sales Dan Flavin EDITORIAL STAFF Editor-in-Chief Editor Managing Editor World-Grain.com Editor European Editor Designer

Morton I. Sosland Arvin Donley Meyer Sosland Susan Reidy Chris Lyddon Ryan Alcantara

PUBLISHING STAFF Vice-Chairman L. Joshua Sosland President and Publishing Director Mark Sabo Vice-President and Chief Financial Officer Melanie Hepperly Audience Development Director Don Keating Director of On-line Advertising and Promotions Carrie Fluegge Promotions Manager Taré Torres Director of e-Business Jon Hall Advertising Manager Nora Wages Advertising Materials Coordinator Debbie Maniez Digital Systems Analyst Marj Potts Circulation Manager Judith Arnone

WORLD GRAIN (ISSN 0745-8991) Volume 30, issue 4, is published monthly by Sosland Publishing Co., 4800 Main Street, Suite 100, Kansas City, MO 64112 U.S. Periodicals postage paid at Kansas City, MO 64108 U.S. and additional mailing offices. Canada Post International Publications Mail (Canada Distribution) Sales Agreement Number 40612608. Send returns (Canada) to Pitney Bowes International, P.O. Box 25542, London, ON, N6C 6B2. Printed in the USA. POSTMASTER: Send address changes to WORLD GRAIN, PO Box 324, Congers, NY 10920-0324. © Sosland Publishing Co. All rights reserved. Reproduction of the whole or any part of the contents without written permission is prohibited. WORLD GRAIN assumes no responsibility for the validity of claims in items reported. Sosland Publishing Co. is a division of Sosland Companies. Inc.

Editorial and advertising inquiries should be directed to our world headquarters at 4800 Main St., Suite 100, Kansas City, Missouri 64112 U.S. Tel: 1-816-756-1000, Fax: 1-816-756-0494 or E-mail worldgrain@sosland.com. Requests for reprints of articles should be sent to reprints@sosland.com or call 1-816-756-1000.

April 2012 / World Grain / www.World-Grain.com

http://www.World-Grain.com http://www.World-Grain.com

World Grain - April 2012

Table of Contents for the Digital Edition of World Grain - April 2012