Higher grain prices and volatility will probably still be in a year or two

International grain traders are seeing booming business in their core trading businesses now and in the future after years of unsatisfactory returns thanks to resurgent grain imports from China and stockpiling by other nations during the coronavirus pandemic, two agribusiness executives told Reuters.
Large agricultural traders, including Archer Daniels Midland Co ADM.N and Cargill Inc CARG.UL, are well positioned to capitalize on smaller global grain inventories and higher price volatility, executives said at the Reuters Events Commodity Trading Summit.
The change comes after years of oversupplied grain markets and lower prices, which resulted in international agricultural trading firms struggling to generate decent returns. And it shows how supply chain disruptions due to COVID-19 are occurring through purchases in some countries.
Grain prices recently rose to multi-year highs in an unusual harvesting season, led by strong demand from importers - particularly China, which is facing a shortage of feed grain.
"The higher price level creates more volatility and the volatility is great for a company like Cargill," said Joe Stone, executive vice president of Cargill's agricultural supply chain.
He hopes this situation will last for another year or two.
China has already purchased record amounts of US corn and soybean purchases are at record levels, while purchases from other major importers are well ahead of recent years, according to the US Department of Agriculture (USDA). As of October 29, US corn exports for the 2020-21 season were up 179% year over year, while soybean exports rose 132%, according to USDA data.
This necessity of purchases, which was partly triggered by pandemic worries about food security, marks a change in relation to purchasing behavior “from hand to mouth” in recent years. A short while ago exporters complained of plentiful grain stocks.
COVID has shown us how fragile and sensitive some of our supply chains are.
The pace of China's volatile buying behavior, sparked by China's corn crop failures and surprisingly strong demand for feed grain as the pork industry rebuilt after the deadly African swine fever (ASF) epidemic, has surprised many other grain importers.

Hansa Terminhandel GmbH
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