The poor availability of corn for the short term is creating the sharp rise in corn prices. The driving force behind this is the Argentinian export restriction. Wheat also relies on slower exports from Russia.
In the 2 shorter last weeks of 2020, activity on the grain futures market in Paris was limited. The wheat price gradually rose, at least for the first contract to expire (March 2021). In Chicago things went faster. For wheat, the decision by the Russian government to restrict exports will have a strong influence on the market from mid-February. Within Europe, France’s very moderate 2020 wheat harvest has left its mark on supply and demand. There is now a greater demand on German wheat, although Germany has also had to deal with lower production than before.
Corn prices rose rapidly, especially on the Chicago market, the March contract price made significant progress from the previous week. It is 15% higher than at the beginning of December. This is where the Argentinian government’s decision to suspend maize exports plays a role. A very poor upcoming harvest is expected, due to drought.
From the 2020 harvest, almost 90% of the 38.5 million tonnes available for export has already been exported. The intention is to reserve the remainder to ensure availability for domestic needs. Given the currently limited availability of maize in both Brazil and Ukraine, the maize buyer now has to turn to American suppliers. This is especially true for China, which is said to have had a very disappointing 2020 harvest itself and, according to Rabobank, is facing rapidly shrinking reserves. The underlying cause of China’s great and growing demand is the ongoing reconstruction of the pig sector. This one suffered a huge setback from the outbreak of African swine fever.
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