Miller Magazine Issue: 141 September 2021

102 MARKET ANALYSIS MILLER / september 2021 come more complex in China, where authorities are introduc- ing many measures to stop the spread of the delta version of Covid-19. The local government of Dalian has just introduced measures that require surveyors visiting shipyards and dry dock facilities to reside in a designated inclusion zone while the ship is being repaired. This requires surveyors to be quarantined while they are working, usually two to three weeks depending on the renovation. Upon completion of work, surveyors must spend 14 days in centralized quarantine at a government fa- cility, followed by seven days of home quarantine. Quarantine measures are expected to bind many inspectors for much longer periods, leading to a shortage of qualified personnel. Shipowners are advised to postpone or arrange surveys at oth- er ports outside China where possible, where attendance at survey does not require quarantine. China's heightened Covid response is also having a significant impact on port calls, lead- ing to increased congestion. According to Drewry Maritime Consultancy, sea contain- er prices have more than doubled over the past year, and container freight rates have been increased 351% year on year. But as container makers strive to meet demand and make huge profits, industry insiders warn of oversupply when the pandemic ends. But let’s back to grains. The stock market reacts sharply to the possible aftermath of Hurricane Ida. Prices fell as damaged grain elevators and power outages at the US' busiest agricultur- al port raised concerns over grain and oil shipments. Individual contract holders sell positions because they understand that they will not be able to complete the delivery. Crop conditions have not changed over the past week, but areas unaffected by the hurricane remain fairly dry. The Asian PMI began to decline due to the Delta strain wave. Global merchandise trade is under threat from potential delta-in- duced disruptions, in addition to still rising transport costs, while retailers have begun shopping for the fall and New Year holidays. The Chinese government continues to purchase pork from the State Reserve, because pork prices fell below the cost of hogs production after the active recovery of livestock amid a sharp rise in the cost of feed. In addition, there was information about the spread of ASF in China, and the USDA already predicts a possible decrease in production by 14%. Recently, the rise in pork production in the EU has put pressure on prices, as weakened demand in the EU, as well as reports of weakening demand from China. Industry analysts at Rabobank expect production growth to be capped in the third quarter of 2021 due to weakening exports and high feed costs. The harvesting campaign of early cereals in the North- ern Hemisphere is almost complete and the farmers have begun winter sowing. A study by Farm Futures magazine on US sowing plans for 2022 found 94.3 million acres of corn planted, up 1.7% from USDA's 2021 estimate. Soybean planting is up 3.7% on 90.8 million acres, wheat planting on 49.7 million acres, up 6.3%. If we talk about corn, all eyes are still on China, but with pes- simistic expectations. They imported about 23MMT of corn in 20/21, close to the USDA's forecast of 26MMT. The Department has left its official forecasts unchanged for 2021-2022, while the USDA's Chinese attache believes that imports are likely to be 20MMT. Chart - Bloomberg. We have already said that this figure may be lower due to substitute goods, and now the fac- tor of a potential reduction in pig production has been added. In the northeast of China, early varieties of corn began to be harvested 10-15 days earlier than planned. Due to the fact that last year the reserves of the State Reserve were at a low level, as well as due to a decrease in production, after the corn har- vest last year, the price rose sharply. This led to an increase in the marginality of this crop, and as a result, an increase in the sown area for corn this year. The weather conditions in China this year are very favorable, with high temperatures and abun- dant rainfall, which in turn contribute to higher yields. This year, following an increase in pork production and a decrease in de-