China: The Coronavirus and the US Import Tariffs

Since the end of January, the coronavirus in China has been pushing global wheat prices lower as demand fears spread.
This week, the Chinese administration allowed importers to apply for tariff waivers on a significant number of agricultural products, including wheat.
After President’s Day, we saw the US wheat market go up 4% as price enquiries began; this is the biggest daily rally in months.

Australia: Drought-Stricken Wheat Crop and Fall Armyworm

Drought

Private analysts have been reducing the size of Australia’s drought-stricken 2019 wheat crop for a while.
This week, the official Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) came out with a crop of 15.2m tonnes.
This is the smallest crop since 2008 and down 600k tonnes from the last estimate in Dec’19. However, it is still higher than FC Stone’s estimate of 14.5m tonnes…will it get smaller?

Fall Armyworm

The devastating ‘fall armyworm’ (Spodoptera Frugiperda) has been detected for the first time in Australia, on the Northern Torres Strait islands.
There have, as yet, been no signs on the mainland, however, this is maybe one to watch…

Northern and Western Europe: Rain and Floods

The French Agriculture Ministry has cut their harvest 2020 winter wheat area from 4.73m ha to 4.7m ha, down nearly 6% from last year due to the wet autumn planting season.
The UK endured an equally wet autumn and now the mainland has been pummelled by Storms Ciara and Dennis over recent days, causing widespread flooding.
With reports of 30-40%+ of the winter wheat area going unplanted, who knows what the wheat crop will eventually yield in August?

Africa to China: Locust Swarms

Swarms of locust have been decimating wheat crops in Africa.
They are now working their way down through the Middle East towards Pakistan and India.
There are concerns that they may continue to reach as far east as China.

Map of Locust Movement in January 2020

India: A Record Wheat Crop for 2020?

India have had a wet monsoon season and the official reports expect a wheat crop of 106m tonnes for 2020, up from 102m tonnes in 2019.
This would be a record crop, although still lower than some private estimates of 113m tonnes.

Global Trade and Exports

EU soft wheat exports have risen 70% to 18m tonnes (as of 16^th February 2020), compared to 10.6m tonnes in the same period last year.
France has been the top exporter followed by Romania and Germany.
The top recipients have been Algeria, Saudi Arabia and Egypt.
In contrast, Russian wheat exports have fallen 14% year-on-year (YoY) to 24.4m tonnes this season (as of 11^th February 2020).

Keeping Us On Our Toes…

Coronavirus has seriously put the brakes on what was becoming a decent wheat rally in January.
However, this week, the Chinese enquiries about US wheat prices and tariff waivers may start to paint a very different picture.
Pay attention to the reducing Australian wheat crop, export flows, flood damage and pests.
These things will keep us on our toes in the forthcoming Weekly Wheat Wonders!

Jolyon Hobby

Growing up on a Wiltshire farm sparked my passion for agriculture. With a BSc Hons in Agriculture and Land Management, I farmed for three years before diving into a 20-year career in the UK grain trade.

In the past eight years, my focus has shifted to the agri-food supply chain, where I focus on understanding the impact of commodity price volatility and transport logistics on the food chain. My expertise now lies in analysing global wheat markets and providing support to businesses across the entire spectrum – from farm to retailer.