Miller Magazine Issue: 138 June 2021

60 COVER STORY MILLER / june 2021 Let’s get straight to the point: the ratio of all EU grains stocks to use is presently at the lowest level in 40 years. New crop carryover also looks tight. And yet, there are persistent rumors about French new crop wheat sales to China. Similarly, USDA posted initial new crop corn stock to use ratio in May, which is lowest in 10 years, and that for beans the lowest ever. Naturally, any imbalance between supply and demand leads to overheated markets with both traders and consumers are nervous as a cat in a room full of rocking chairs. The wheat values have gone up steeply this year, have come down significantly and currently find solid sup- port in high corn prices refusing to drop further on fore- casted ample supplies. Due to anticipated strong feed demand, potentially at an unprecedented level, including increased uptake in China, India, the EU and the USA, 2021/22 wheat consumption is projected to grow year to year. Nearly a quarter of all the feeds traded on global markets will be earmarked for China next year. Total US corn sales for 2021/22 season are already at nearly 11 MMT – an unprecedented level for this time of the year. Corn puts a solid floor under feed wheat values and Asian buyers maximize feed wheat purchases at current hefty corn values. Black Sea milling values compete on the other hand with the Australian wheat for consumer demand while Argentinean farmers are struggling to have their wheat planted in the current persistently dry condi- tions. With the amount of grain being bought by China - both current supply and commitments - global com- modities are seemingly set to be extremely high for a while. Animal feeding sector is bound to experience significant rise in feed costs for the next couple of years. There is a one million dollar question hanging over the market: what happens if the American wheat, corn and soybean crops come in with less than expect- ed yield this year given that they are increasingly at risk on both quality and quantity? Recent forecasts for near-record high prices have already assumed record yields for US corn and soy- beans. So what happens if US crops do not meet the USDA's expectations? Well, then we may expect to see new all-time highs for those crops. At the same time we will also likely see more coun- tries try to cushion the blow of high global food prices. “Wheat markets will continue to be anything but boring. A seasoned wheat consumer should not be fooled by ample supplies, and should procure cov- er on the breaks and if and when long-awaited harvest pressure materializes ahead of projected record demand.” Maneuvering in the Dark Natalja Skuratovic Senior Manager Sales CIS PETKUS Technologie