World Grain - November 2021 - 18

GRAINMARKET REVIEW
Monthly wheat prices
(in US dollars per tonne)
WHEAT
Prices reach highs on tight supply,
strong demand
by Chris Lyddon
Strong demand, expensive freight and limited availability
have pushed wheat sharply higher in recent months in frequently
volatile trading.
In its Oct. 21 Grain Market Report, the International Grains
Council (IGC) said that its index for world wheat prices had
risen by 5% over the preceding month, reaching a near nineyear
high, " bolstered by a tight supply and demand outlook in
the major exporters. "
The index was 35.7% higher than the level a year before.
FranceAgriMer, France's national office for agricultural and
seafood products, said following a meeting of its field crop
and grain specialists on Oct. 13, that " world prices remain
strong in a context of uncertainties over exportable supplies,
particularly in Russia, which could once again limit its wheat
exports in the coming months to curb the rise in prices on its
domestic market. "
Milling wheat prices on the Euronext exchange had started
to rise again since mid-September, reaching values " significantly
higher than those observed over the past five years, "
FranceAgriMer said. " As of Oct. 8, milling wheat was quoted
€269.5/tonne ($313.94/tonne) on Euronext, up 35% compared
to last year on the same date and 52% compared to the average
for the past five years. Cereal markets are also strongly
impacted by rising energy costs and sea freight prices, driven
mainly by Chinese demand for coal following the country's
electricity production crisis. "
FranceAgriMer also said prices of nitrogenous fertilizers
made from natural gas, today three times higher than those of
last year, should strongly impact agricultural production costs,
or even affect farmers' planting choices in spring 2022 in favor
of less nitrogen-intensive production.
In the Wheat Letter Blog, published by US Wheat Associates
(USW) on Oct. 14, Michael Anderson, a USW market analyst,
compared the current market situation with the bull market
that began in 2006-07. At that time, Joe Sowers, a USW
senior market analyst, explained that " unforeseen weather
calamities around the globe and major wheat exporters protecting
supplies for domestic use " had helped to drive prices
18
Mar 21 Apr 21 May 21 Jun 21 Jul 21 Aug 21
Wheat (US), No. 1, hard red winter, ordinary protein,
export price delivered at the US Gulf port for prompt
or 30 days shipment.
to record highs, with stocks at their lowest level in 60 years.
" Lower world wheat supplies and some key exporters still
trying to hold down domestic food prices are also fueling the
current market rally, " Anderson said.
He explained that the most recent USDA National Agricultural
Statistics Service Small Grains Report puts the total US
wheat supply at 44.9 million tonnes, down 10% from output
in 2020.
" The latest USDA World Agricultural Supply and Demand
Estimates (WASDE) report released Oct. 12 also signaled
lower production, " Anderson added, pointing to a cut of 4.4
million tonnes in the world's 2021-22 crop. " The report briefly
sent US wheat futures higher (followed on Oct. 13 by managed
money profit-taking). "
Anderson pointed to a fall of 17 million tonnes in stocks
since the record high reached in 2019-20.
" USDA now projects 2021-22 world use to outpace production
by 11 million tonnes, while global wheat demand continues
to set new records, " he said. " Drought conditions in Canada,
the United States and Russia, along with quality issues
in the European Union, have cut exportable wheat supplies. "
Meanwhile, British expert Richard Whitlock in his Oct. 17
" A Point of View " newsletter, said, " Countering all this bullishness
is the reality that farmers respond very positively to
high prices by planting a larger area. Weather conditions permitting,
there is still the chance that global crop output could
increase next season. "
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.
November 2021 / World Grain / World-Grain.com
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Source: US Department of Agriculture and World Bank
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World Grain - November 2021

Table of Contents for the Digital Edition of World Grain - November 2021

World Grain - November 2021 - Intro
World Grain - November 2021 - 1
World Grain - November 2021 - 2
World Grain - November 2021 - 3
World Grain - November 2021 - 4
World Grain - November 2021 - 5
World Grain - November 2021 - 6
World Grain - November 2021 - 7
World Grain - November 2021 - 8
World Grain - November 2021 - 9
World Grain - November 2021 - 10
World Grain - November 2021 - 11
World Grain - November 2021 - 12
World Grain - November 2021 - 13
World Grain - November 2021 - 14
World Grain - November 2021 - 15
World Grain - November 2021 - 16
World Grain - November 2021 - 17
World Grain - November 2021 - 18
World Grain - November 2021 - 19
World Grain - November 2021 - 20
World Grain - November 2021 - 21
World Grain - November 2021 - 22
World Grain - November 2021 - 23
World Grain - November 2021 - 24
World Grain - November 2021 - 25
World Grain - November 2021 - 26
World Grain - November 2021 - 27
World Grain - November 2021 - 28
World Grain - November 2021 - 29
World Grain - November 2021 - 30
World Grain - November 2021 - 31
World Grain - November 2021 - 32
World Grain - November 2021 - 33
World Grain - November 2021 - 34
World Grain - November 2021 - 35
World Grain - November 2021 - 36
World Grain - November 2021 - 37
World Grain - November 2021 - 38
World Grain - November 2021 - 39
World Grain - November 2021 - 40
World Grain - November 2021 - 41
World Grain - November 2021 - 42
World Grain - November 2021 - 43
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World Grain - November 2021 - 45
World Grain - November 2021 - 46
World Grain - November 2021 - 47
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World Grain - November 2021 - 49
World Grain - November 2021 - 50
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World Grain - November 2021 - 84
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https://www.nxtbook.com/sosland/wg/2016_01_01
https://www.nxtbook.com/sosland/wg/2015_12_01
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http://digital.world-grain.com/sosland/wg/2010_09_01
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