Great competitive pressure on the grain market

China's great appetite for grain is leading to sharp price increases in Europe as well, as traders struggle to meet urgent export demands in the face of dwindling supply.
As local buyers such as fodder manufacturers vie with importers for a shrinking European grain surplus, prices could continue to rise until demand subsides or the next crops hit the market in the world's large surplus regions.
China is currently on a buying frenzy for grain from the world market, partly due to the rebuilding of its pork industry after a swine disease epidemic.
Europe has a smaller grain harvest this year and rival wheat exporter Russia has fewer exports than expected, while Europe's largest corn supplier, Ukraine, is struggling with drought. China's demand is shaking up the market in the EU. Everything is expensive and it's more about export than import, says a French trader.
It is not expected that a shortage of grain supplies in the EU will become apparent in food prices.Important producers like Müller have a decent supply of raw materials. In addition to the higher raw material costs, other production costs have decreased. Competition from supermarkets regulates the prices of staple foods.
However, the grain collection stage is feeling the pressure of competition with exporters through whom the grain flows out of Europe, say traders. Lower demand for food and beer, which are being consumed less in pubs and restaurants due to coronavirus lockdowns, mean that supplies last longer.
Buyers may have to restrict themselves further, as the next South American corn harvest in spring and the European wheat harvest next summer are a long time coming. The consulting firm Agritel sees a very strong demand for wheat in Europe in the coming months. The supply may even have to be rationed.
Although France harvested a quarter less wheat and barley this year, France is expected to deliver even more grain to China than last season.
This has enabled Germany, Poland and the Baltic states to export more wheat to Algeria, which is usually mostly supplied by France.
Northern EU countries are also shipping wheat to Asian markets like Pakistan as higher Russian prices and precautionary purchases from importers have spurred demand during the COVID-19 pandemic.
The exports of common wheat or common wheat from the EU and Great Britain in 2020/21 are 20% below the record level of last season. However, this corresponds to a delay of 40% two months ago. The gap could narrow further as large sales have been shipped recently.
Traders said several ships of French feed barley were sold for shipping to China in the summer of 2021. This was an unusually early sale for the next crop, which has seen French barley premiums soar this month. Sales of French barley to China have accelerated due to tension between Beijing and main barley supplier Australia.
Corn buyers do not have better conditions for corn either.
The drought in Ukraine reduced the harvest and reduced the expected inflows into the import-dependent EU livestock industry, increased prices and prompted processors to use more feed wheat or secondary grain.
The EU and UK imports of corn, which will remain in the EU internal market until December, are 17% lower by 2020/21 than a year ago.

Hansa Terminhandel GmbH
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