Miller Magazine Issue: 121 January 2020

88 MARKET ANALYSIS MILLER / JANUARY 2020 But after Brazilian President Bolsonaro stood on the US President Donald Trump’s side following a recent kill- ing of an Iranian military leader, Iran has announced it will no longer purchase corn from Brazil. For today just a few countries supplying grains to Iran. For example, Russia from the beginning of current MY sold more than 0,7 MMT of corn, 0,5 MMT of barley and near 100,000 MT of wheat without showing it in official custom statistics. Partly Russia could satisfy Iranian demand but not for all commodities. Will Turkey do it? Another thing interesting to mention is that in a week before conflict escalation, Iran makes a deal with Russia for a few shipments of wheat. Firstly, it was a rumor about 1-3 MMT, but after Russian United Grain Union saw about 130,000 MT be- fore February 2020. How did they know it in advance? Thirdly, the Trade War and 15 of January “Phase 1 Signing” between the USA and China highly support mar- kets before the last moment. As agreement conditions were unclarified prices increased both futures and cash markets. But after the ceremony, it makes cooler. China agreed to increase purchases of American products and services by at least $200 billion over the next two years. But the main case is small phrase – “on market condi- tions”. Before the trade war, China bought $130 billion in the USA goods and $56 billion in services. The total number for 2017 was much less than new target. Also, China has committed to $32.9 billion increase in 2020 and a $44.8 billion increase in 2021 in additional man- ufacturing purchases over two years vs 2017 levels, at least $52.4 billion in additional energy purchases. That’s why China announced a few days before to delay there 10% ethanol blending citing food security concerns? Additional purchases of the USA agriculture products by $32 billion over two years is the most interesting for us part. But if we try to compare the best trade years numbers, it’s clear to understand that it’s more impos- sible: corn best years were 2011 - $13,7billion or 2018 – 69,75MMT, soybeans – 2012 - $24.8 billion or 2016 – 57.8MMT, wheat – 2008 - $11.3 billion or 1981 – 43,9MMT, pork – 2014 – $6,65 billion or 2017 – 2,45 MMT. We extremely should bear in mind that none of them were in the same year and max value different from volumes as well. Besides these, even the sum of the best-years just lightly higher target volume, but prices are twice lower than those years. So, if we feel that something could happen, let’s re- member Aristotle Onassis: “We must free ourselves of the hope that the sea will ever rest. We must learn to sail in high winds”