December 6, 2012

Members of the International Grains Council (IGC) met on 6 December under the
Chairmanship of Mr Seung-Cheol Lim of the Republic of Korea. The Council considered the
latest developments in the global grains and oilseeds markets, the medium-term supply and
demand outlook, recent changes in national policies and various administrative matters.
These included an update on participation in the Agricultural Market information System
(AMIS) Secretariat, which the IGC joined in October 2012. The meeting was followed by a
Round Table discussion on GM regulation and its impact on world trade.

The Council’s latest forecasts for supply and demand (see www.igc.int) underlined the
tightness of global grains and oilseeds balances. As outlined in the IGC’s monthly Grain
Market Reports, the most recent published on 29 November, it had been an eventful six
months since the previous Council Session in early June, as dry conditions had a significant
impact on grains harvests in the northern hemisphere. The daily IGC Grains and Oilseeds
Index (GOI) had risen sharply to an all-time high by early September, boosted in particular
by strength in maize (corn) and soyabeans due to drought in the US, before retreating more
recently, centred on better news on US soyabean yields. However, it was still up 19% from
the beginning of the year.

For wheat, the Secretariat pointed out that the supply and demand balance had tightened
significantly in 2012/13, and that near-record production would be required in 2013/14 to
keep the global stock-to-use ratio steady. It gave its first estimate for production in the next
crop year (2013/14), based on the progress of winter wheat crops, showing a 4% y/y
increase. Maize consumption was expected to fall in 2012/13 for the first time since 1993/94,
a result of low availability, with world carryover stocks in the main exporters expected to
decline to a 16-year low. While rice balances and prices had been relatively stable in
comparison to grains, this year had seen a substantial rise in China’s imports. This was most
likely due to attractive international prices relative to domestic quotations, and did not
necessarily imply local market tightness.

For oilseeds, the Secretariat highlighted the importance of South America’s crops for the
forecast recovery in soyabean output in 2012/13, but pointed out that the anticipated record
harvests would merely return the aggregate level of stocks in major exporters to average
levels. It also noted that rapeseed/canola supplies were especially tight and that high prices
were likely to encourage larger 2013/14 plantings. For both, there was significant
vulnerability to any further supply-side difficulties.

The Secretariat also presented its annual assessment of the five-year outlook for supply and
demand balances including, for the first time, projections for soyabeans and
rapeseed/canola. With the exception of rice, disappointing harvests had lowered the starting
point for this year’s projections for global supplies, but relatively high prices were expected to
encourage plantings going forward.

For wheat and coarse grains, the projections indicated increasing production over the
outlook period, but little potential for stock building, as improved supplies were expected to
be absorbed by demand, driven predominately by maize. The outlook was more stable for
rice, although the outcome would critically depend on government policy, especially in major
exporters.

For soyabeans, supplies appeared more comfortable over the outlook period, assuming a
rebound in production in the US, Argentina and Brazil. As with other projections, it was
implicitly assumed that conditions would be favourable for crop development. Adverse
weather, as seen in the US and South America this year, could drastically alter the outlook
and carry significant upside price risk, as inventories remained tight. The projections
indicated a marked increase in trade volumes through the five-year period, as increased
demand was expected to be met by production growth in the key exporters, most notably in
South America and the Black Sea region.

The Council considered various administrative matters including an update from the
Secretariat on progress with its economic work programme, of which the most significant
development was the establishment of full coverage of soyabeans and rapeseed/canola
supply and demand. The Council was also briefed on the IGC’s contributions to the AMIS
initiative, including: the provision of supply and demand information for grains, rice and
soyabeans; daily price monitoring through the GOI; and an extended summary of the Grain
Market Report on its public website.

The Council appointed Mr Deepak Kumar, Joint Secretary, Department of Food and Public
Distribution, as Vice-Chairman for 2012/13.

The Council received a statement from the WTO on recent developments, and welcomed
the participation of Observers from several non-member countries, namely Bolivia, Brazil,
Guatemala, Taipei (Chinese) Separate Customs Territory and Vietnam.

The Round Table discussion on GM regulation and its impact on world trade, which was
moderated by the IGC Chairman, involved both industry and government representatives1.
The discussions highlighted the challenges facing producers, traders and regulators, given
the increasing availability of GM crops amid varying degrees of public acceptance.

Website: http://www.igc.org.uk

Published: December 7, 2012