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Global Wheat Prices Supported by Record Global Imports
11.12.2020 13:31 "Agro Perspectiva" (Kyiv) —
According to the report of the USDA Grain: World Markets and Trade (December 2020), wheat prices for major consuming and exporting countries surged from last year despite record global production and ending stocks. Prices found support, in part, from record global imports and consumption in 2020/21. Furthermore, unexpectedly strong import demand in China and Pakistan helped bolster global trade to a record this month due to unprecedented demand from both countries and other major importers, driving stocks in exporting countries lower and strengthening global prices. Global wheat prices have also been pulled higher in recent months on strength in global oilseed and feed grain prices. Despite record 2020/21 supplies in China, domestic spot prices in the world’s largest consuming country were more than 10 percent higher this November compared with the previous year and the highest in 5 years. Strong domestic prices for corn and wheat led to the largest forecast of wheat imports in 25 years; FOB prices for major exporters were more than $100/ton less than domestic spot prices for either corn or wheat in November Ironically, global wheat prices have risen in recent months despite record global stocks. Growth in global stocks has mostly been supported by higher domestic support prices and government stockholding in China and India. China holds more than half of global stocks, representing more than one year’s worth of its wheat consumption. Over the past few months, the rate of sales from auctions of China’s stocks is accelerating, leading to more availability of old-crop wheat in the domestic market. Nevertheless, China has increasingly relied upon the global market to satisfy its wheat demand. This, in turn, has tightened exporter stocks. For the first quarter of the 2020/21 July/June trade year, Canada and the United States were the largest supplying countries to China. With record exports of 26.0 million tons, Canada’s stocks are forecast nearly unchanged from the previous year despite a record crop, partly owed to unfettered early-season demand from China. Canada was the largest supplier in the first 4 months of the trade year. Stocks in the United States are projected to fall more than 4 million tons from the previous year, also partly due to exports projected at their highest level in 4 years aided by strong China import demand.
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