From S&P Global Platts, January 18:
This week's Tracker looks at trends in global agriculture and biofuels, as supply-demand fundamentals support grains prices, dry bulk freight rates spike and uncertainty persists around US biofuels blending mandates. Plus, gas-to-oil switching in Asia and the latest indicators on European air traffic and jet fuel demand.
1. Supply concerns, export curbs support global grains prices
What's happening? South America remained a big focus of the agriculture industry in late 2020, with weather, production and supply developments driving a huge rally in the grain markets. In Argentina, after several back-and-forth decisions on a corn export ban, the government reversed its decision Jan. 12 after a series of strikes paralyzed the agriculture economy. Further soybean and corn production cuts in Brazil due to dry weather have raised fresh supply concerns, while last week the US Department of Agriculture sharply slashed US corn and soybean yields and ending stocks, taking the markets by a surprise.
What's next? On the buy side, besides rising demand in other Asian nations, China's voracious grain demand growth is adding pressure. As a result, an apparent mismatch between supply and demand is expected to support grain export prices in the coming weeks. As of Jan. 13, prices of corn and soybean delivered into Northeast Asia and China have already risen 13.7% and 15%, respectively, over the past month. After Russia's announcement of grain export curbs starting February, markets will keep a close eye on trade measures as major grain producers aim to contain domestic food inflation amid expected limited supplies....
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