- Wheat was quoted on April 22, on the grain exchange in Chicago, at the highest price in the last seven years
- What role does China play in the import and price game?
The price of corn rose last Thursday to the highest value in the last eight years. And wheat was set at the highest price in the last 7 seven years. This against the backdrop of bets that rely on the return of economies, China's demand and unfavorable weather developments that will empty the silos, reports Bloomberg.
Wheat and corn, maximum quotations on the stock market
On April 22, corn futures on the Chicago grain exchange recorded the maximum increase allowed in a single day. The contract for delivery in July rose 4,1% to $6,315 a bushel, the highest level since May 2013. A similar appreciation was recorded in the case of wheat, where the benchmark contract appreciated by 5,3% up to 7,105 dollars per bushel, the highest price in the last seven years. Also, in soybeans, the benchmark contract crossed $15 per bushel for the first time since 2017.
Will prices go up?
Cold and drought in some regions are fueling concerns that there won't be enough grains and oilseeds to meet China's high feed needs or meet growing demand for biofuels. This is as the world economy recovers after the coronavirus pandemic. China is so interested in buying more corn that it has already started to reserve some of the next crop. Demand is not expected to slow down this year.
Concerns about a possible poor harvest
Investors have started to turn to agricultural commodities. In addition, limited global stocks mean that adverse weather developments will lead to further price increases. American farmers have slowed down planting. I do this against the background of low temperatures that may have also affected the wheat crops, in which case the harvest would begin in a few months. At the same time, Brazil's second corn crop is suffering from drought. Thus, concerns about a possible poor harvest are growing.
Rising corn futures quotes make wheat more attractive
The increase in corn futures makes wheat more attractive to be used as feed. Especially, when farmers postpone selling their corn to take advantage of future price increases. "At the moment corn is running out and the cheapest alternative is wheat. It registers significant increases", says Joe Nussmeier, broker at the American firm Frontier Futures. The US Department of Agriculture recently estimated that China will import 28 million tons of corn from all countries in the 2020-2021 season. Even if next year purchases could drop to 15 million tons, it is double the quota set by the World Trade Organization that allows Chinese companies to import corn at a lower level of taxation.
