Paris Grain Day : A neutral upward trend for 2020

Paris, February 3, 2020 – “The Paris Grain Day Consensus is showing a neutral upward trend for calendar year 2020 with a score of 3.08 out of 5 (5 being very bullish),” announces Michel Portier, director of Paris Grain Day. It is above the 2019 indicator of 2.55, a slightly bearish consensus.

Resulting from the vote of all the international players in the agricultural raw materials sector present at the Paris conference, it reflects their sentiment on the market at the moment on all of the market drivers.

Paris Grain Day was launched in 2017 by the consultancy company Agritel: it is the Paris conference dedicated to the grain markets. The experts chosen and brought together during the conference (13 speakers representing all the continents) shed necessary light on key themes influencing the price of raw materials. “Geopolitical tensions, global warming, dietary changes are major issues which are impacting our analysis and activities in 2020,” said Michel Portier.

Paris Grain Day brought together 250 actors and international experts from the grain sector. Photo: Philippe Caldier

According to the experts present, 3 major market elements are to be followed in 2020 :

1. The Black Sea region: Following Isaac Hankes, Weather Research Analyst (REFINITIV’, USA), the Black Sea region belongs to the winners of global warming. Though drought may worsen, Russia is one of the most likely areas to warm significantly, opening up new potential grain areas. The Black Sea region remains a major competitor of French origin for common wheat.
   Based on 40-year trends being more unfavourable than 60-year trends in current production areas, the grain market being a global warming winner may depend on expansion into new regions, said Hankes.
2. In corn, the weak demand on the American market leaves little prospect for a price recovery.
   “We need Chinese growth to stimulate demand for agricultural raw materials,” said Emily French, Founder and Managing Director of Consiliagra, an American strategy and brokerage company in the global agricultural markets.
3. Due to its agricultural and logistical development, Brazil should remain a major exporter of soybeans to China, despite the new trade agreement between China and the United States. However, it will be necessary to follow the evolution of Chinese demand following African swine fever and coronavirus because the country will increase its demand for oil at the expense of soy cake.

More generally, market operators agree that strong geopolitical tensions will have a greater influence on fundamentals in 2020. They also explained that the activity of sea freight and in particular the Baltic Dry Index should be followed closely. “International shipping costs are likely to increase as a result of tighter pollution regulations since January 1, 2020,” said Cyrille Coutansais, Director of Research at the Center for Strategic Studies of the Navy (CESM).