Demand uncertainty in grain markets
Amy Reynolds of the International Grains Council (IGC) stated that demand uncertainty could be one of the main factors affecting grain markets in the coming months.
She was speaking during a live webinar as part of the Cereals Event in the UK, which went online this year due to the Covid-19 pandemic.
Corn use, particularly in ethanol production, starch use and food use for wheat are all uncertainties in the market at present.
According to Amy, record opening stocks and record production will push the total wheat supply higher and the rate of demand picking up is uncertain. The risk of competition from maize crops in animal feed is also a factor which may affect price.
Global wheat production is forecast at record levels. In the southern hemisphere, the Australian crop was planted into good conditions and yields are set to increase dramatically following drought conditions in previous years.
Amy also noted that approximately 30% of the crop is planted in Argentina and there is the potential for a record harvest.
In Europe and the Black Sea region there are still risks to the production outlook and export availability is uncertain. However, the ample opening stocks of wheat will provide some buffer for crop problems.
Amy expects trade to remain close to the historical peak and feed wheat to see competition from maize.
World maize supplies are projected to be record high. As maize has not been in demand by the ethanol sector there are ample supplies and so maize will find demand in animal feed with competitive prices.
According to Amy, trade of the commodity is set to be at record levels and US exports are set to reach a three-year peak.
However, it should be noted that while industrial use dropped in the 2019/2020 season, its use is expected to recover in 2020/2021.