Miller Magazine Issue: 145 January 2022

62 COVER STORY MILLER / january 2022 In the Southern Hemisphere, the nature is also a con- cern. Similar to last year, la Niña weather pattern is already showing up in parts of Brazil, the world’s biggest soybean exporter and it is not a welcome sight as La Niña can bring about drought and reduced crops and, thus, fuel a further spike in food prices. Paraná is the only region with consol- idated losses due to dryness so far. Brazil’s south remains in the center of attention. Rio Grande do Sul, a top-growing state at the border with Argentina almost finished seeding in less than perfect conditions. Below-average rain during seeding means that some farms need replanting. Yields will largely depend on rains from now on. Second bumper Australian wheat harvests in a row is a remarkable turnaround from three years of extreme drought and meager crops. Australian broker Ikon Commodities says that the country's wheat crop could be close to 39 mil- lion tons as opposed to the USDA figure of "only" 34 mil- lion and 2020/21 record-high crop estimated at 33.3 million tons. Renewed availability of Aussie grain after repeated re- cent shortfalls, curtails trade routes and optimizes logistics for key importers in neighboring Asian countries. Natural- ly, as longer trading routes lead to ceteris paribus higher freight rates, making grain at destination more expensive, especially in the current environment of high energy prices. Talk of China booking another 500kmt of Auss- ie feed wheat for April-May positions might be a harbinger of a long-awaited thaw in recent political and trade tensions between the two countries. It has been one of major concerns for the world grain markets and influenced the buying decisions in the past few years. When geopolitics rules, prices as a decisive factor in purchasing decisions, lose their relevance, thus, affecting the validity of key market mechanisms. This, in turn, severely affects global trade flows. China’s increasing demand for grains and oilseeds continues to play a key role in stimulating growth in ag- ricultural exports globally. China keeps importing more grain and other foodstuffs this season as domestic production struggles to keep up with local consumption. Also, demand for feedstuffs for the reinstated af- ter the swine fever number of pigs and other livestock is ex- panding on the back of the eco- nomic growth. According to data from the U.S. Department of Ag- riculture, by the first half of crop year 2022, China is expected to hold 69% of the globe's corn reserves, 60% of world rice and 51% of world wheat.