Miller Magazine Issue: 131 November 2020

28 NEWS MILLER / November 2020 While global stockpiles are at a record high, inventories in major exporters are near a six-year low, partly because of strong imports. China is set to buy the most wheat in a quarter century. Demand is also emerging in unusual places like Pakistan, which is poised to become a net importer. Wheat importers building reserves to safeguard supplies From Russian farmers literally steamrolling seeds into parched fields to China’s rising demand, the reasons for wheat’s rally to a six-year high keep growing. With far- mers in the U.S. to Black Sea battling drought, the poor plantings start is raising worries that the market could further tighten. That’s happening at a time when impor- ters are building reserves to safeguard supplies, promp- ting fund managers to turn more bullish. While global stockpiles are at a record high, inventories in major exporters are near a six-year low, partly because of strong imports. In Russia -- which is set to reclaim its ranking as the top shipper -- sales are accelerating on ro- bust demand ahead of a planned export quota next year. That’s putting strain on the country’s railways and cau- sing ships to wait longer for cargoes. China is set to buy the most wheat in a quarter century and has already booked large amounts from the U.S. and France. Demand is also emerging in unusual places like Pakistan, which is poised to become a net importer. Many nations want to bolster reserves to protect against any coronavirus-related supply disruptions. While Russian winter-grain plantings are set to reach a record, dryness is fueling concerns about how much of the crop will emerge and develop enough before freezing weather sets in, said Alexander Korbut, vice president at the Russian Grain Union. From Aug. 1 to mid-October, rainfall was about a 10th of the 30-year average in Rostov-on-Don and Stavropol -- cities in a key growing region -- according to forecaster Maxar. Conditions are so bad that some farmers are using ste- amrollers to press in seeds to stop them being blown away on dry ground and help them to develop once rains arrive. In the U.S., the winter-wheat area exposed to drought has reached a season-high 41%. That means plantings may miss expectations, said Terry Reilly, an analyst at Fu- tures International in Chicago. Money managers are the most bullish on wheat in se- ven months, partly as funds pile into agricultural commo- dities, lured by a weaker dollar and expectations that inf- lation could pick up. “Sooner or later the funds will return to the sale, but for the moment their buying momentum remains intact,” consultant Agritel said. Rising grain costs are already feeding through to pri- cier meals, with a United Nations’ gauge of food prices at a seven-month high. That could further hurt economies battered by the pandemic and put more pressure on nati- ons suffering from hunger crises. BLOOMBERG