Arable Will a US-China trade war trump
grain market fundamentals? • Global politics unsettling markets • Gains eroded aſt er trade war scares • Weather concerns but stocks high
A
long-awaited upturn in the grain markets is un- der threat from Donald
Trump’s international trade pol- icy, says Cofco UK trading direc- tor Stuart Shiells. “Markets have been charac- terised by a long period of rela- tively fl at trade with the Inter- national Grains Council (IGC) six months ago forecasting the sec- ond highest level of world grain stocks on record. “Consequently, the bench- mark wheat futures markets of Chicago and Paris were languish- ing at levels that fully refl ected this oversupply scenario. “But in recent months, mar-
kets have strengthened by about 15% – a rise of around £20 per tonne in UK ex-farm prices – mainly driven by lower produc- tion forecasts caused by increas- ing demand and adverse weather in key production regions.” According to the IGC, this will result in the fi rst contraction in world grain stocks since 2012/13, he points out.
“In the US, heavy snow in the northern Plains and excessive rains in the Midwest delayed the start of Hard Red Spring (HRS) wheat and corn plantings.
Dry conditions “Conversely, conditions in the southern Plains were too dry for the Hard Red Winter (HRW) crop, resulting in historically poor crop condition ratings. “In addition, excessive dryness
for Brazil’s Safrinha corn crop has caused some analysts to cut total corn production there to as low as 82m tonnes versus the Unit- ed States Department of Agri- culture’s initial forecast of 92m tonnes.”
In the key Black Sea region, a relatively benign winter has given way to mixed spring and early summer weather, adds Mr Shiells. “There’s been recent dry- ness in Ukraine and especially southern Russia with ongoing de- lays to spring plantings in Sibe- ria impacting on production there as well.
Regional headquarters with global reach
Cofco purchases all types and grades of cereals, oilseeds and pro- teins from UK farmers. It markets and distributes grain to the food, feed and bioenergy sectors at home and abroad. The company also supplies farms with a range of certifi ed seeds and fertilisers. Strategically located production, processing and logistical as- sets support Cofco’s signifi cant global sourcing and effi cient dis- tribution capabilities. In East Anglia, the company has its head- quarters at Ipswich, Suffolk. Supported by Cofco’s position in China, the company aims to create a vertically-integrated global agricultural supply chain, strengthen worldwide origination, logistics and trading capabili- ties and grow its business globally.
Need roguing? Call the experts...
Call 01223 506384 or email
info@vanstomp.co.uk now!
14 ANGLIA FARMER • JULY 2018
“In western Europe, grain production potential in Germa- ny, Poland, Denmark and the Bal- tic states will also have been re- duced by warm, dry conditions.” However, despite all the talk of lower production, the USDA’s own estimate of world wheat stocks released in June actual- ly rose by two million tonnes to more than 272m tonnes, he says. “The USDA put Russia’s crop at 68.5m tonnes but the indus- try believes this will be higher at 72m tonnes.”
Further price rises
If all the concerns in different countries deliver their full con- sequences then prices could have further to rise, he says.
“But the reality is that the old
adage of ‘buy the rumour, sell the fact’ – that things rarely turn out to be as bad as expected – tends to hold true.
“Many would argue that, some damage to 2018’s global produc- tion potential has clearly been done, but the effects of this are really already priced into the market.”
Normally, so long as northern hemisphere crops remain unhar- vested, there is hope that prices could rise higher still, but these
UK markets have risen on the back of lower production forecasts, says Stuart Shiells
are not normal times, Mr Shiells concludes.
“President Trump’s recent threat of tariffs against China has rattled equities, foreign ex- change and commodities, as well as the grain markets. “Growers longing for prices to return to the heady heights of fi ve years ago, will now have not only the fundamentals of supply and demand to contend with but pol- itics as well.”
Stuart Shiells is trading director for Cofco International UK – formed by the merger of the former Nidera and Noble Agri names worldwide.
www.uk.cofcointernational.com
Cofco’s East Anglian offi ce is at Ipswich
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76
