Miller Magazine Issue: 134 February 2021

57 INTERVIEW MILLER / february 2021 But now we have another thing to think about and we'll update our crop forecast when this happens. That is the new floating permanent tax. And again, if that tax is ap- proved, I think we will cut our wheat number from the cur- rent 77.7 million tons by around 1.5-2 million tons. So if this happens, that implies 76 million tons crop, 10 million tons below the previous year. And that's again bullish for the new crop prices. IMPORTANT FACTORS TOWATCH FOR GRAINMARKETS If you remember our first meeting about two years ago, you said that the margins for the big commodity traders are going down. The Covid-19 pandemic seems to reverse this trend. Would you agree with this? Yes, it reversed and prices are going up. The market is pretty volatile and volatile environment where traders should make money or they just should go out of the busi- ness. So, we've seen good numbers from large multina- tionals recently. But still, if we look not into the just recent years, but bigger picture, like 10-20 years, the market has become way more transparent. Farmers have more pow- er, more bargaining power, access to information, which is relatively cheap. He understands what's happening in the world the way better than before. And traders in many cas- es are just doing technical stuff. Yet, they're not speculat- ing. They're just doing technical stuff… shipping the grain, booking the trade, doing the insurance, sending the grain. That's it, and that's why their margins are low. This year was exempt, relatively good because of high prices, because of volatility. But it doesn't change the global picture, long term picture in my view. Last question…What are the other factors we should watch in terms of global wheat markets, except Russian restrictions? Russian restriction is a big story. We talked about this a lot. Probably there are three or four most important things to watch. For the global grain market, we don't watch only wheat, corn is also very important. They're very closely re- lated. For global supply-demand, global prices for this year, the next biggest thing is the South American crop. I'm talking about the corn crop. That's a very big question. Crop in Argentine, first crop in Brazil… We still don't understand what's hap- pened to the second crop in Brazil. And that is overlapping with huge Chinese imports. Chinese imports are the second factor to watch because there was a lot of de- bate about how those big imports are going to be. The US says that is 17.5 million tons. Local foreign agriculture service says 22 million tons. Someone says 25 million tons in this season. That's changes global Supply & Demand a lot. And corn S&D is becoming tight almost every week with those Chinese purchases. And the big question is if they will continue to buy in next season as well. So Chinese buying number one topic. One idea is that they will become a big importer for a few years at least. 20 million tonnes, 15 million tons…That’s a very big volume. And another possibility that they'll just restock their stocks now and stop such aggressive buying. So Chinese buying, South American crop, regulations in Russia and obviously, the market will soon start to trading the weather conditions and crop conditions in Northern Hemisphere for the next wheat crop. Russia is not look- ing good because of the weather. Ukraine is looking not bad. It's not a disaster. Actually, we expect an increase in production in Ukraine to 27.2 million tons of wheat, com- pared to 25 million tons in the previous season. The EU looks relatively good. Substantial increase in production is projected for the next year, around plus 14-15 million tons compared to the previous year. US crop is not looking good because they also had some weather issues, because of La Nina which affected major winter wheat regions. So again, the weather for Northern Hemisphere in March, April, late February also should be an important factor to watch. Thank you so much for your comments and answers. Do you want to add anything else? I encourage you to have a look at our main service called Sizov Report. You can easily check our website at sizov.report. We are making the global grain market more efficient and transparent by shedding light on what's happening in the Black Sea, by helping farmers, funds, traders and miller to trade better or manage their risk better by getting reliable, neutral and accurate information from the region, which often drives the global markets. I encourage you to go there and have a look at our service and get a free trial which is available on our website.