World Grain - March 2021 - 16

GRAINMARKET REVIEW
Global wheat supply and demand trends
(in 1,000 tonnes)

800,000

China, costly corn driving bullish market
by Chris Lyddon

400,000
300,000
200,000
100,000
2020-21**

2019-20*

Ending stocks
Consumption
*Estimated **Projected

2018-19

2017-18

2016-17

2015-16

2014-15

0

2013-14

16

500,000

2012-13

Despite record production, the world's wheat market has
started 2021 with strong prices driven primarily by China's
thirst for grain, with Russia's measures to limit exports and
the high price of corn for feed helping to sustain the upward pressure.
The US Department of Agriculture (USDA) said in its
Feb. 11 Grain: World Markets and Trade report that " wheat
prices rose in most major exporting countries since last
month's WASDE due to higher global consumption and
lower ending stocks, coupled with the continued strengthening of corn and soybean prices. "
5XVVLD ZLWQHVVHG WKH PRVW VLJQL¿FDQW FOLPE EDVHG RQ
SROLF\ DQQRXQFHPHQWV D൵HFWLQJ JUDLQ H[SRUWV WKH 86'$
said.
" Canada and the US remain the most expensive origins,
partly due to lower forecast ending stocks and strong exports, " the USDA said.
In its Jan. 14 Grain Market Report, the International
Grains Council (IGC) said wheat prices had risen by 9%
since its previous edition, published Nov. 26, 2020, bringing them to the highest level since late 2014.
" While some support continued to come from wheatrelated fundamentals, the rise in values was partly in response to strength in maize and soybeans, " the IGC said.
" As Southern Hemisphere harvesting accelerated, falling
production expectations in Argentina provided some support, although this was countered by better-than-anticipated
results in Australia, " the IGC said. " While Russia's harvest
ZDVFRQ¿UPHGWREHRQHRIWKHODUJHVWLQKLVWRU\WKHUHZDV
uncertainty about the implications for prices from news
that Russia's exports were to be subject to a quota/tax from
mid-February.
" Tightening export surpluses in the EU and Ukraine
contributed to overall bullish market sentiment. However,
much of the focus switched to new-crop prospects and additional price support over the past month came from worries about a less-than-ideal start to the 2021-22 growing
seasons in the US and Russia, seen potentially lowering
new-crop export availabilities at those origins. "
The IGC's forecast for the 2021-22 wheat crop is a record 791 million tonnes, up 3% from 2020-21.
The Feb. 9 USDA World Agricultural Supply and De-

600,000

Production

mand Estimates report described the global wheat outlook
for 2020-21 as " for greater supplies, increased consumption, higher exports, and reduced stocks. Supplies are
raised 800,000 tonnes to 1.073 billion. Global production
is increased to a record 773.4 million tonnes as higher proGXFWLRQLQ.D]DNKVWDQPRUHWKDQR൵VHWUHGXFHGSURGXFWLRQ
in Pakistan and Argentina. "
World 2020-21 consumption is increased 9.8 million
tonnes to 769.3 million, mostly on higher feed and residual
use for China and increased food, seed, and industrial use
for India, the USDA said.
" China's 2020-21 feed and residual use is raised to a record 30 million tonnes, surpassing the previous 2012-13
record of 26 million, " the USDA noted. " China's domestic
corn prices continue to be at a premium to wheat, encouraging greater wheat feed use. Additionally, increased auction volumes of old-crop stocks in China have expanded
the availability of feed-quality wheat. "
The USDA also raised its forecast for 2020-21 world
trade by 1.1 million tonnes to 194.8 million, with increased
H[SRUWVIRUWKH(88.DQG.D]DNKVWDQPRUHWKDQR൵setting a reduction for Argentina.
" The largest import change this month is for China,
where imports are raised to 10 million tonnes on a continued robust pace, " the USDA said. " Projected 2020-21
world ending stocks are lowered 9 million tonnes to 304.2
million, with most of the reductions due to increased consumption for China and India. However, global stocks remain record high with China and India holding 51% and
9% of the total, respectively. "
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to
worldgrain@sosland.com. For reprints of WG articles, email reprints@sosland.com.

March 2021 / World Grain / World-Grain.com

Source: US Department of Agriculture's Foreign Agricultural Service

WHEAT

700,000


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