World Grain - December 2020 - 18

GRAINMARKET REVIEW

WHEAT
Prices firm amid weather,
COVID-19 concerns

Monthly wheat prices
(in US dollars per tonne)

250
200
150
100

by Chris Lyddon

:KHDWSULFHVKDYHEHHQ¿UPDURXQGWKHZRUOGZLWKVWURQJGHmand, notably because of the feed needs of the EU and China,
coming up against concerns over unfavorable weather for production. The resurgence of the coronavirus (COVID-19) pandemic, along with the imposition by many governments of renewed lockdown measures has raised further uncertainties about
how demand will develop.
The US Department of Agriculture's Foreign Agricultural SerYLFH )$6 VDLG LQ LWV *UDLQ:RUOG 0DUNHWV DQG7UDGH UHSRUW
SXEOLVKHG1RYWKDW³ZRUOGZKHDWSULFHVUHPDLQHG¿UPWKLV
month, mostly due to dry weather impacting the start of the growing season in the Northern Hemisphere and unfavorable production conditions in Argentina. "
" Strong global export demand drove further price spikes in
&DQDGDWKH(XURSHDQ8QLRQ5XVVLDDQGWKH8QLWHG6WDWHVGHPonstrated by robust export sales reports this month, " the FAS
said. " Concerns about the rise in COVID-19 infections worldZLGHDQGUHFHQWUDLQVLQ5XVVLDDQGWKH863ODLQVVRIWHQHGSULFH
increases more recently. "
,QLWV:KHDW2XWORRNSXEOLVKHGRQ1RYWKH86'$¶V(FRQRPLF5HVHDUFK6HUYLFHSXWJOREDOVXSSOLHVRIZKHDWLQ
at 1.073 billion tonnes, up 700,000 tonnes from its earlier estimate, despite a small cut in production, because of an increase
in carry in.
" More abundant wheat supplies support a 1.7-million-tonne
lift in consumption with gains attributable primarily to increased
IHHGDQGUHVLGXDOXVHLQ&KLQDDQGWKH(XURSHDQ8QLRQ´WKH(56
said. " In China, abundant supplies of sub-milling grade wheat
DUHH[SHFWHGWRVXSSOHPHQWIHHGUDWLRQV:KHDWIHHGDQGUHVLGXDO
XVHLVUDLVHGLQWKH(8IROORZLQJDVLJQL¿FDQWFXWLQFRUQIHHGing stemming from reduced domestic and Ukraine-grown corn
availability. "
The United Nations Food and Agriculture Organization said in
its Food Price Index report, published Nov. 5, that " wheat export
SULFHVURVHIXUWKHULQ2FWREHUUHÀHFWLQJVWURQJJOREDOGHPDQG
amidst shrinking export availabilities, poor growing conditions in
$UJHQWLQDDQGFRQWLQXHGGU\ZHDWKHUDGYHUVHO\D൵HFWLQJZLQWHU
wheat conditions in parts of Europe, northern America and the
Black Sea region. "
,QLWV2FW*UDLQ0DUNHW5HSRUWWKH,QWHUQDWLRQDO*UDLQV
Council (IGC) said " uncertainty about production prospects in
some regions propelled world wheat export prices higher during
October. " Its index for wheat prices rose by 7% on the month.
18

50
0

May 20

Jun 20

Jul 20

Aug 20

Sep 20

Wheat (US), No. 1, hard red winter, ordinary protein, export price
delivered at the US Gulf port for prompt or 30 days shipment.
Source: US Department of Agriculture; World Bank

" Much of the focus remained on poor growing conditions for
Argentina's 2020-21 crop, where some local analysts sharply
lowered production expectations, " the IGC said. " Market particiSDQWVDOVRFRQWLQXHGWRPRQLWRUFORVHO\GL൶FXOWVHHGLQJFRQGLtions for 2021-22 Northern Hemisphere crops, including in parts
of Europe, the Black Sea region and North America.
" Strong export demand and steep gains in row crop values,
especially for maize, also contributed to generally bullish sentiment in markets. Market tone turned softer toward the end of the
month, under pressure from improved weather for 2021-22 crops
in some areas and worries about escalating cases of COVID-19
in many countries.
" Early-month price support in the US came from lower-thanDQWLFLSDWHG R൶FLDO SURGXFWLRQ HVWLPDWHV ZKLOH WLJKWHUWKDQHQYLVDJHGVWRFNVDWWKHHQGRIWKH¿UVWTXDUWHURIWKHPDUNHWLQJ\HDU
signaled higher-than-foreseen demand. "
The IGC said solid export demand, albeit showing signs of
waning as prices climbed, and escalating maize values, contribXWHGWRSRVLWLYHSULFHVHQWLPHQW7KH&RXQFLOTXRWHG86+5:
export prices as having risen by $24 during the month, to $273
IRE*XOIZLWK65:FOLPELQJE\WRIREDQG+56
XSE\WRIRE31:
7KH,*&DOVRUHSRUWHGKLJKHUH[SRUWYDOXHVLQ5XVVLDFLWLQJ
good export demand, logistical challenges and dry conditions for
the 2021-22 crop as driving the increase.
" Due to high local milling wheat and feed prices, there was
sustained speculation about possible government measures to
contain domestic values, " the IGC said.
5XVVLD¶VIDUPPLQLVWU\KDVVLQFHFRPHXSZLWKDSODQWROLPLW
JUDLQGH¿QHGDVZKHDWEDUOH\PDL]HDQGU\HH[SRUWVEHWZHHQ
Feb. 15, 2021, and June 30, 2021, to 15 million tonnes.
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.

December 2020 / World Grain / www.World-Grain.com


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World Grain - December 2020

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