Thursday, December 2, 2021
Home Maritime Updates Grain market prices softened as tightening grain supply concerns eased this week

Grain market prices softened as tightening grain supply concerns eased this week


The recent concerns of world’s tightening grain supply have eased this week thanks to major wheat harvests in Australia and Canada, together with rain relief for soy and corn crops in Brazil.

Dry conditions in Brazil and Argentina have fuelled fears of supply shortage as China already imported much of the new U.S. harvest. However, as the weather conditions improve in South America the concerns about an international supply scarcity reduce and so does soybean and crop market prices. Regarding wheat, U.S. futures had the first weekly loss in three weeks and the biggest decline since the end of October. Canada’s wheat production is set reach a seven-year high and Australia is on track to producing their second-biggest-ever wheat crop at the same time that Australian wheat exporters refuse to reach trade deals with Chinese buyers due to escalating trade tensions. In addition to the supply pressure Russia, the world’s top wheat exporter, has proposed to expand its grain export quota this week. (Reuters)

But who is to blame of the high prices in the grain market? To that matter, China stated its increased imports of corn and wheat are not the reason. An official with the National Development & Reform Commission said it was irresponsible to blame China’s increased grain imports to rising prices since the country only accounts for a tenth of global trade. Instead, the Chinese official considered that the reason for the upturn in prices was the continued corona virus pandemic and food security uncertainty. (Bloomberg)

Considering the pandemic impact on agriculture supply chains around the globe, the Chinese government has drafted a new law on grain reserves. Earlier this year the government encouraged farmers to prioritize on grain plantations as a respond to supply shortages in the country. The pandemic threatens a potential food supply crisis as the virus continues to spread “posing severe challenges to China’s grains stockpile security” the National Development and Reform Commission said in a statement on its website. The new law would have local governments build up reserves of processed grains and oils to a suitable scale in medium-large cities and regions with markets that are easily affected by volatile changes. 

As China addresses their supply concerns, the U.S. administration expanded the economic pressure on the country specifically on the western region of Xianjiang, the location of a major cotton producer (Xinjiang Production and Construction Corps), as it was banned for, according to the U.S. administration, forced labor of detained Uighur Muslims. This move by the Trump administration was supposedly intended to harden the U.S. position against the Asian giant, making it more difficult for the upcoming new government to ease U.S. – China tensions. (Reuters)


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