Miller Magazine Issue: 125 May 2020

77 INTERVIEW MILLER / MAY 2020 member countries, the reductions depend on countries. For the end of the 2019/20 season, the largest reductions concern France, Italy, Spain and the UK, with smaller falls in Germany, Scandinavia and the Baltic States. Thus, based on the assumption that restriction measures will be ex- tended through most of May and June, we reduce project- ed demand from the milling sector by 3% in year equiva- lent (-1.3 Mt) this month. At 44.5 Mt, soft wheat milling demand in the EU for current ending season 2019/20 is now estimated 1.4 Mt below the level of 2018/19. At present, there is very little visibility concerning the duration of containment measures in EU countries, or for how long out-of-home catering establishments must stay closed into 2020/21. However, we are working on the ba- sis that the health crisis will continue to weigh heavily on demand and could therefore disrupt activities in the milling sector during July-December 2020. For the time being, we are assuming that the disruptions will continue for a lon- ger period of time during marketing year 2020/21 than in 2019/20, especially in the out-of-home catering and tour- ism sectors. On the other hand, in anticipation of a total or partial end of containment measures during the second half of 2020, and a resumption of activities in the artisanal bakery sector, we project that the impact will be less severe than in the April-June 2020 quarter. As a result, we revise down projected demand for wheat from the milling indus- try for the 2020/21 season by 1% this month (-0.5 Mt). EU milling demand is now expected to increase by 1 Mt to 45.6 Mt from the level of 2019/20. With the coronavirus crisis already triggering concerns over food security, Russia’s export quotas for grain de- pleted. How could grain export suspension from Russia affect the grain market this time? It was expected that Russian stocks would be very low at the end of the 2019/20 campaign and that Russian exports in the last months of the campaign should have to decrease. This is exactly what is currently happening and which leads, in particular, to record exports from other countries of which the EU (34 Mt compared to only 32 Mt for common wheat in 2018/19). Even if all global supplies have to be mobilized, there is no supply problem at present: this is the reason why we think that the prices of the 2019 harvest have already reached their highest levels. Do you think the pandemic would cause radical re- forms in the food supply system? Several importing countries have already started to in- crease their reserves: we observe this trend in certain coun- tries of the Middle East for a wide spectrum of products: meat, protein, cereals. This trend should continue and lead countries that rely heavily on imports to build up stocks. Another consequence could also be the desire to push local supply to the detriment of the supply of imported ma- terials where it is possible to do it. Is there anything you would like to add? This coronavirus crisis is occurring together with a serious oil crisis. The latter stems in part from the fall in demand caused by the pandemic, but it also results from the global overproduction of oil and the struggle between the major producing countries. The effects of low oil on economies that derive much of their income from oil will combine with the effects of the pandemic. In some oil-producing coun- tries in Africa and South America, this could seriously dis- rupt access to imports and the food balance.