Miller Magazine Issue: 145 January 2022

90 MARKET ANALYSIS MILLER / january 2022 • long duration - 20-70 years. • the main factor in the supercycle is usually demand, which is growing due to major structural changes in the world's largest economies (the oil crisis of 1960-1990 - an exception). • prices for all key raw materials have a general long- term upward or downward trend. From what we definitely know in the past we faced 4 supercycles: • Industrialization of the United States in 1890-1930. • Global pre-war militarization and post-war economic recovery • Global oil shortages as a result of the OPEC embargo and the Iranian revolution • China's economic recovery and industrialization So the key question is if the last one ended or not. China is one of the most influential economies in the world. After the trade war with the United States, AFS outbreak and its consequences, systemic internal econ- omy problems in advance of the new 5-year-circle in COVID pandemic days it’s like the Anka bird – not the Humaia. The current commodity rally has been made possible mainly by the powerful infusion of cheap money into mar- kets by central banks and governments of the world's leading economies in an attempt to reduce the negative effects of the pandemic. Price increases are not caused by structural changes in leading economies, changes in technology or geopolitical processes. Everything is bad: the last time it was in 1929. The development of environmentally friendly indus- tries and green energy could be the sign of a new circle. The supercycle of industrial metals will still have to go through a phase of post-pandemic decline in public fi- nancial support for China and other major global players. The market of the ferrous metals group, which includes steel and iron ore and is many times larger in terms of money than the market of non-ferrous metals, will not re- ceive such support. Are traditional hydrocarbon energy sources, such as oil and coal, becoming cheaper? Meanwhile, we faced the domino effect, and after the grain, not without a political context, fertilizers entered the race. Farmers around the world say their costs are rising. But they are silent about the fact that they have not seen such prices, if not for a long time. It is worth paying attention to the ratio of the cost of a ton of wheat and ammonium nitrate (now - the peak in the last 5 years) and corn to NPK (peak was in 2018/19). How many tons of products need to be sold to buy fertilizers is, in fact, higher than the average for the last two seasons, but this ratio cannot be called explosive. Rather, the question may not be in cost, but in availability. ANOTHER INTRIGUE OF THE SEASON WILL BE NEW DESTINATION REACHING Swiss-based Solaris, which has deep connections with RF, is confident China will become a big buyer of Russian wheat, following breakthroughs in the Algerian market, says Reuters. Solaris won a large part of the Algerian state wheat tender in November and the supply is due in December after years of lobbying for access to the market traditionally dominated by France. Why knows – maybe with a help of sacred wild boar. For Russian wheat exporters, Egypt is a strategic ex- port destination, and it is clear that companies are look- ing for ways to strengthen and expand their presence in this market. In the first half of the season, Egypt clearly lagged behind in terms of purchases, and the share of Russian grain in tenders decreased. Not surprisingly, af- ter the success of negotiations with Algeria, a delegation of Russian officials went to Cairo. And these negotiations were successful. A Russian-Egyptian joint venture is be- ing set up to supply Russian grain to the Egyptian mar- ket. Mr. Eduard Zernin head of the Russian Grain Union says, that potential investment projects were also dis- cussed during the Russian agribusiness business mis- sion to Egypt earlier in December, including the long-dis- cussed issue of building a grain hub for Russian grain in the MENA region. At the same time, the wheat harvest in Russia is much lower than expected by the Ministry of Agriculture. That is, on the one hand, officials seek to create maximum barriers to the exit of grain from Russia, and on the other - provide it with new markets. Argentina burst into the market suddenly with a rush. Although a small, compared to Russia, but record cop, which is estimated at 21.5-22.5MMT, in addition to neigh- boring countries, is actively sold to Indonesia, Nige- ria, Kenya and MENA countries - at least 2 vessels are shipped to Turkey, at least 3 vessels to Morocco, as well as several cargoes to Algeria and Egypt in Decem- ber-January. What the market has been waiting for since the beginning of last season - harvest pressure - has happened. Despite the lack of quality grain at the start of the season, the Southern Hemisphere is able to form the satisfied quality batches at a competitive price due to quantity. Australia has already predicted 37-39MMT by locals, although there were preconditions that the rains implement a scenario similar to the European and