World Grain - March 2024 - 20

FEATURE: A YEAR OF RISK AND UNCERTAINTY
" In Russia, stocks (of wheat) at end of December
reached 22 million tonnes, " he said. " They need to export.
They will compete with all the other origins. "
Referring to France, he explained that it would have to
export between 10 million and 10.5 million tonnes to nonEU
countries.
" We only reached 52% by the end of January, " he said.
" We will need to compete with Russia. "
For 2024, he stressed that area is the most important
thing to follow, forecasting a fall for French acreage.
" It will be very difficult to reach 30 million tonnes for
Isabelle
Job-Bazille,
chief
economist
of Credit
Agricole SA,
was one of
the speakers
at the 2024
Paris Grain
Conference.
" On the other side, in the US, we expect a slowdown. The
main difference in terms of growth prospects will be...
policy, which will remain expansionary in the US. "
She continued, " It will be probably more restrictive
in the eurozone, " which means that " growth in Europe
should remain relatively weak compared with the US. "
She highlighted geopolitical uncertainty, noting that
Ukraine is affected by " sort of erosion of the international
support with financial resources that are not forthcoming. "
" There are two wars now in the Middle East, " she said.
" But, in fact, in 2024 the eyes of the world will be on
the exceptionally busy electoral agenda from Taiwan and
Britain to India to Ireland. Almost half of the world's population
will go to the polls this year. "
Tight wheat market
Arthur Portier, senior consultant at Agritel, noted the
large short position held by funds in agricultural markets.
He also pointed to ending stocks in the main exporting
countries.
" The wheat market is quite tight, " he explained.
" Twenty percent of the main ending stocks are in Russia.
The Kremlin could do what they want with grain exports. "
He described the situation as " dangerous for the wheat
market. " He suggested stocks of wheat and maize in the
major exporters could rise to 120 million tonnes in 202324,
resulting in a stocks-to-use ratio of above 12%.
Regarding Ukraine, Portier said that in December it exported
4.8 million tonnes from the Port of Odesa.
" Ukraine is becoming, again, a key player on the international
market, " he said, describing its resurgence on the
market as bearish.
20
French wheat this year, " he said. " Same in the UK, same
in Germany, same in a lot of places in Europe. "
Eero Vanaale, principal consultant for the shipping
consultancy Drewry, highlighted that " in the immediate
aftermath of the invasion of Ukraine, exports dropped to
almost nothing, " because of the blockade of the ports.
" In July 2022, the Black Sea Grain Initiative was
agreed, " making seaborne exports possible, he said.
Russia ended the deal on July 17, 2023, but " the exports
continued, " he said. " They were slowly ramping up until
the end of 2023. The structure of exports is dominated by
corn, accounting for about 50%, wheat 30%. "
Despite Russia leaving the initiative, prices have remained
below pre-invasion levels. Ukraine exports from
the Black Sea have grown more than far eastern ports, for
example, he said.
" Russia is not attacking vessels, " he said. " There hasn't
been a single insurance case. "
Shipping market outlook
The global shipping market has adjusted to the new
situation.
Vanaale also referred to the effect of regulations on
the shipping sector, highlighting reduced emissions
targets put in place by the International Maritime
Organization. It is very ambitious, he said, but it means
additional costs.
" Demand for ships is exceeding the growth in supply, "
he said. " The market tightens up. "
Even so, freight was cheaper in 2023 than 2022.
" The story of 2023 has been coal impacting dry
freight demand because of China, " he said. " For 2024,
we expect upward pressure on the dry freight supply
and demand. "
Among the possible reasons he gave were continued
geopolitical uncertainty, congestion in the Brazilian
ports and the Panama Canal, and the cost of new emissions
rules.
Managing risks
The conference also featured a discussion on managing
risks in the cereals markets. Moderator Charles
Funnell, managing director at CF Commodities, asked
March 2024 / World Grain / World-Grain.com
http://www.World-Grain.com
World Grain - March 2024

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