World: World crops and consumption not that impacted by Covid-19 pandemic yet
The corona pandemic, affecting all sectors of the economy, has, however, no great impact on world crops and consumption yet, H. M. Gauger GmbH said in their July report.
All official institutes, IGC, EC, USDA, FAO, report remarkably stable numbers in their monthly publications. We do know, of course, that the food and beverage sector loses turnover, and the June 30 U.S. stock report shows a 29% reduction of domestic corn feed and residual usage in the past quarter.
The 2020 forecasts of world grain and oilseed crops show a larger corn and soybean production and no major changes for the other grains. As total production is estimated larger than consumption, the basic market trend is bearish. There will be geographical differences, e.g. a possible record crop in Australia, but also crop disasters as in locust-struck East Africa (locust traces also in Arab countries, Russia and South America). The EU forecasts a sharply lower wheat crop.
Politics has a great influence on markets. One example is China’s stance against Australia and Canada. Perhaps the most important market factor is the U.S.-Chinese trade deal - its phase one obliges the Chinese to buy substantial amounts of U.S. agri-products: it looks as if the Chinese will abide by the treaty and that is constructive for U.S. soybean and grain markets.
In the early phase of the corona crisis ocean freight markets and port activities came under heavy pressure and disorder. Now the economy is slowly coming back to life and the freight market turned very strong; the BDI panamax index improved by 80.7% from the depressed month of May, and also by 12.1% y/y.
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