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Agricultural goods are at the beginning of a “mini-supercycle” that will drive up prices for demand from China and biofuels for several years, according to some of the world’s most important traders.
Officials at Cargill, Cofco, Viterra and Scoular said this week that the corn, soybean and wheat markets will remain strong for the next two to four years.
Prices have fallen for many years in recent weeks as the U.S. dollar has risen and rain is forecast in the midwestern U.S., but future corn prices have doubled from $ 3.29 a year ago, with soybeans $ 14.31 65 cents higher, and wheat nearly a third is higher at $ 6.54.
“We’re definitely looking at a mini supercycle,” said David Mattiske, Viterra’s general manager, most of whom is owned by Glencore. FT Commodities Global Summit. “We are in a demand-driven environment, with a growing population, with the issues of people consuming more and more wealth. And in addition, we have a greater demand for plant-based fuels.”
Continuous high prices will be beneficial for farmers who have felt the financial stress of stagnant prices for several years in agriculture. However, it does mean higher food costs for grain and oilseed importers, especially in the poorest countries struggling with the economic effects of the pandemic and rising food prices.
The grain and soybean markets had a big boost in the second half of last year, after governments and companies he set off for the warehouse during the pandemic. China did a poor corn harvest big purchases, last year it imported a record 11.3 million tonnes, and more than a third of the total came from the US.
According to Alex Sanfeliu, head of Cargill’s world trade unit, two large harvests a year mean corn and soybeans (one in the US and the other in Brazil) mean that grain and oilseed supercycles tend to be shorter than other crops, but predicted the bull market next two or for four years. “The features of the super cycle are there,” he said.
China’s large corn imports last year, previously aimed at self-sufficiency, caught traders and analysts by surprise, and sparked controversy over whether the pandemic accident was “replenishing” it or whether shopping would continue.
Several executives believe the gap will remain in place, prompting more and more power to continue importing corn. Marcelo Martins, the trade issue of the Chinese state conglomerate and head of grain and oilseeds at Cofco International, said there is an imbalance in supply due to poor harvest. “[The supply deficit] it’s here to stay, ”he said.
Meanwhile, demand for biofuels, which has been raising soybean and soybean oil prices, is “unprecedented,” according to U.S. farm manager Paul Maas Scoular. While governments are pushing to reduce the use of fossil fuels, many are increasing the amount of biofuels mixed with gasoline. “The increase in demand is real and we are all looking forward to seeing how we play out,” Maas said.
Despite the excitement, Gary McGuigan, head of global trade for Midland Archer Daniels, added a warning. “We’ve seen a price correction roughly in recent weeks,” he said, adding that the dynamics of demand were “definitely changing” that it was too early to call it a mini supercycle.
One of the biggest doubts was China. “Of the large areas of the world affected by demand, China is the most prosperous and most difficult to predict,” he said.
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