Miller Magazine Issue: 121 January 2020

49 COVER STORY MILLER / JANUARY 2020 Have other markets taken on the engine of consump- tion growth? While the US, Brazil and Argentina are clas- sified as major exporters, they are also large captive mar- kets, with processed products consumed domestically or exported to an array of destinations. Taken together, total use significantly exceeds uptake in China and, as such, has a sizeable influence on global trends. After ris- ing by 7% in 2018/19, a further modest increase should push up demand to a new high in 2019/20. In addition to feed sector gains, the government of Brazil is seeking to boost domestic demand through expanded industrial use: after increasing to 11% (B11) in September 2019, the biodiesel blending mandate is scheduled to rise to B12 in early 2020, with further annual increases taking the blend rate to B15 in 2023. Since soyabean oil accounts for close to 80% of overall feedstock utilisation, the policy is aimed at underpinning gains in processing over the medium-term. Looking ahead, however, a return to trend rates of global growth is by no means certain. This ultimate- ly hinges on a recovery of soyameal demand in China, largely through the rebuilding of hog inventories which have been significantly dented over the past year due to ASF. For more than a decade, China has been central in shaping global soyabean import demand as world trade rose near-uninterruptedly over a lengthy period, reach- ing a record of 153m t in 2017/18. In the period since, however, prospects for growth have been greatly com- pressed by a reduction in China’s requirements as policy and demand uncertainties took hold. The onset of the US-China trade dispute during 2018 saw a heavy shake-up of tradition- al trade flows, with China securing much larger amounts from Brazil at the expense of US exporters. All of this occurred at a time of upheaval in China’s vast feed sec- tor as ASF led to a collapse in the nation- al pig herd and, with it, a drop in demand for feed ingredients, particularly soyameal. While other, relatively smaller importers – including in the EU, Near East Asia, the Americas and North Africa – have partly compensated, global trade still edged low- er in 2018/19. Based on IGC’s most recent forecasts, traded volumes were expected to show little y/y change in 2019/20 as a modest recovery in China’s imports was likely countered by reductions elsewhere. However, at the time of writing, news emerged of an initial agreement between the US and China, which could culminate in a pick-up in China’s purchases of soy- abeans. Should this ultimately lead to a normalisation of trade flows between both nations, it may have potentially significant ramifications for the world market in 2019/20 and beyond. Not only for other exporters, such as Brazil, but for a range of other relatively smaller buyers, which sourced sizeable volumes from the US over the past two years. Furthermore, with new crop supplies scheduled to come on stream during the first half of 2020, recently announced policy changes in Argentina, notably an in- crease in the effective rate of tax applied to exports of soybeans and products, could also be a key influence in the global market in the year ahead. TOWARD THE IGC CONFERENCE 2020 The grains and oilseeds global market are at the proof of the globalization. Beyond trade disputes, the econom- ic uncertainty on the 2020 world economy and the lack of policy initiative to overcome the non-tariff measures may hamper these dynamic markets. The next IGC Confer- ence, which will be held on the 9th and 10th June 2020 at London will represent a unique opportunity to address the need for the grains and oilseed sectors to enhance the globalisation, to discuss the policy initiatives needed. The speakers will also demonstrate the proactivity of the Grain value chain when taking actions on reduction of carbon emission. All the IGC’s team is working hardly to welcome you in the best conditions and provide you the most attractive program.