World Grain - July 2015 - 62

FEATURE: WORLD FLOUR TRADE TO RISE AGAIN

IGC says industrial use of grains to rise slightly in 2015-16
The International Grains Council (IGC), in a report released
in late May, forecast world industrial use of grains in 2015-16
to edge higher year on year, to 325.9 million tonnes, led by
gains for starch and brewing.
Use for ethanol is projected to stay broadly unchanged, the
IGC said.
"With large global grains supplies anticipated, raw material
costs for industrial processing are likely to remain relatively
low. However, demand for industrial products is expected to
be capped by lackluster economic growth in some countries
and, for ethanol, by weak crude oil prices," the report said.
Most of the expansion in world industrial use of grains is expected to come from higher demand for starch-based products.
Starch has many uses in food and non-food sectors, including
in processed foods, adhesives, paper and textile manufacture,
construction materials, and in the cosmetic and pharmaceutical industry. The IGC said demand for many of these tends to
increase when economies are growing. However, given only
moderate prospects for global economic growth in the year
ahead, use of grains for starch is forecast to rise by around 2%
year on year, to 114 million tonnes, compared with the annual
average gain of 3% in the past five years.
The report noted that profit margins in the ethanol sector
have been squeezed by weak crude oil prices in 2014-15. In
the U.S., low maize costs supported record levels of ethanol
output last fall. However, the falling oil market steeply eroded
ethanol profitability in the New Year, while rising stocks
were seen as evidence of weak demand. "Ethanol output
consequently fell steeply," the IGC said. "Some facilities were
reported to be undertaking annual maintenance shutdowns
earlier than normal and a recent surge in output reflects
plants resuming production."
World wheat flour trade
(in 1,000 tonnes)
Top Importers

2015-16**

Iraq

1,550

Afghanistan

1,350

Uzbekistan

1,300

Syria
Brazil
Top Exporters

700
650
2015-16**

Kazakhstan

2,750

Turkey

2,650

Iran

950

Argentina

700

UAE

690

**Projected
Source: International Grains Council

62

World industrial use of grains
(in million tonnes)

350
300
250
200
150
100
50
0

Ethanol
2015-16 **

Starch
2014-15*

Brewing
2013-14

Total
2012-13

* Forecast **Projected
Source: International Grains Council

While industry profitability started to show some improvement of late, it remains historically low and, with expectations
of crude prices to stay comparatively weak in the medium
term, growth in grain-based ethanol is projected to be slow in
the year ahead, the report said.
Reduced raw material costs have been beneficial for the
global brewing sector, especially for the production of beer.
The IGC said demand for beer is rising most strongly in Far
East Asia, including Vietnam and Thailand, and in South
America, particularly Brazil. "However, growth potential here
and in some other Latin American countries may be affected
by poorer economic prospects as well as unfavorable currency
movements, which are inflating the cost of imported barley
malt," the IGC said.
At 1%, the year-on-year gain in world use of grain for brewing is forecast to be fractionally slower than the five-year average, taking projected consumption to about 38 million tonnes.

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World Grain - July 2015

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