World: Risk of an ever growing demand for grain remains for future years beyond 2021/22
World grain markets exploded into a new price range, without China buying in April. H. M. Gauger GmbH said in their May report.
Markets were volatile, of course, but the bull trend could not be broken. It seems that the majority of agri-experts - trade, industry, banks - have been convinced by now that market fundamentals require the present price levels - for demand destruction (a strange word for non-professionals).
Population growth and higher standards of living, a larger quality food (meat) consumption required an ever growing amount of agricultural produce. A huge part of the corn and soybean crops ends up in the production of crude oil replacement. Chinese purchases started the bull market. After selling much of their corn and wheat reserves, Chinese imports have grown excessively: soybeans to 100 mln tonnes per year, and grains to 50 – 60 tonnes.
Trade and industry are nervous: we need good supplies from Argentina and Brazil, but drought problems have reduced their corn and soybean crops, particularly corn in Brazil^ Safra reduced its crop estimate to 104.1 mln tonnes from 112.8 mln last month; private estimates are even below 100 mln tonnes.
In the northern hemisphere frost and drought problems threaten crop results anywhere from the Canadian Prairies to the Russian Black Earth regions. The S/D problem concerns first of all the years 2021/22, but the risk of an ever growing demand remains for future years.
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