Miller Magazine Issue: 143 November 2021

96 MARKET ANALYSIS MILLER / november 2021 cycled using this technology, resulting in approximately 500 million gallons of SAF and other renewable hydro- carbons will be produced. Ethanol producers' margins in the US are once again positive, supporting corn prices on the back of declin- ing inventories at Cushing and rising oil prices. Oil prices climbed to Monday weekend, hitting multi-year highs, aided by limited global supply and rising fuel demand in the United States and beyond as the economy recovers from the pandemic-triggered recession. AgResource es- timates the US ethanol industry is operating at 96% of full capacity, with production expected to remain at or near capacity for the foreseeable future. A similar situation is observed in Brazil, where etha- nol prices are rising. Due to the shortage of corn at the moment, it is possible that Brazil will import American ethanol. Today Brazil continues to contract corn in Ar- gentina - 8 more vessels were bought for November and December. The corn lineup in Ukraine for October 2021 is at the level of October 2020 exports (~ 1.8 MMT), al- though the harvest is estimated to be ~ 25-30% high- er than last year. Thus, if part of the lineup goes into November, it would mean an even slower pace of exports on an annualized basis (as a percentage of production) at the same absolute rates. Cleaning in Ukraine, as in a number of EU countries, is 2-3 weeks behind schedule, and there is a problem with in- creased moisture in uncleaned areas. The situation should stabilize during November. But "a lot" does not mean "good quality". And we repeat the race for quality - as in barley, as in wheat. Wheat in China continues to rise in price, the spread between corn and wheat is narrowing. Due to the abun- dance of precipitation in the main wheat growing re- gions, slightly more than 20% of the area was sown on October 20, which is 13% less than in the same period last year. The State Reserve of China is trying to stabilize prices by selling stocks of 2018 and 2020, but this does not help much to contain the price of wheat. The price factor influences the choice of corn as the main raw material for feed production. In some regions, the price of wheat has already caught up with the price of corn. The volume of transactions concluded when sell- ing from the State Reserve is about 30%, which means the purchase of wheat, mainly by the processors them- selves, without the active participation of traders. Changes in the accounting policies of the central banks of the main countries participating in the market also affect the cost of grain. While Argentina and Austra- lia are just starting to ease their grain, they are already selling in January and February. And they say thanks to the drought in Turkey, Syria, and the countries. There is a price, and it doesn't matter why it is. I just want to remind you that nothing is infinitely long. Then China will come. And Chinese pigs. And nothing else matters.