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Trade war, Russia and tech: What to know as grains world meets
[LONDON] The grain market's had a lot to think about this year. US-China tensions have upended global trade flows, droughts around the world damaged crops and Russia keeps expanding its wheat dominance.
Those talking points will remain key as more than 1,000 traders, shippers and agribusiness executives gather in Geneva this week for the annual Global Grain conference. Much of the focus will be on the winners and losers as the trade war plays out, as well as how rival wheat shippers can close the gap when Russia's exports finally start to slow.
And don't forget tech. There'll be discussions on modernizing the trading and movement of crops, particularly using blockchain, the technology behind digital currencies.
Here's what's likely to be high on the agenda in Geneva through Thursday:
Soybeans have been among the crops most affected by China's retaliatory tariffs against the US, with Chicago futures reaching a 10-year low as Chinese buying slowed. That's allowed Brazil to step up sales to China, boosting export prices at the South American nation's ports. The impact on prices has also raised the prospect of U.S. soybean farmers, who are reaping a bumper harvest, switching to other crops such as corn and wheat.
While it's unclear when or how the US and China will resolve their dispute, a deal could cause a significant change in prospects for the soy market, Commerzbank AG said last week. And if traders didn't have enough to ponder on China, the country recently adjusted a decade of production data for major agricultural commodities.
Black Sea Dominance
Top wheat exporter Russia has been shipping at a record pace thanks to an early harvest and large stockpiles, and is looking to further expand into North Africa, a key market for France. But the pace is expected to slow following this year's smaller crop, and that will be to the benefit of rival exporters. For example, more competitive supplies have seen US grain sold via a recent Egyptian tender.
Ukraine's also grabbing more of the corn-export market amid attractive prices and a record crop. The US government on Thursday raised its outlook for Ukraine's shipments by 8 per cent, helped by sales to Europe and China. The question is whether the country's infrastructure will be able to cope with the extra sales.
After the summer heatwave cut output, another dry spell is stressing European and Black Sea wheat areas as the next crop gets planted, though there's plenty of time for weather fortunes to change before the harvest. For now, the dryness may curb rapeseed plantings and is causing shipping problems within Europe as river levels fall, Germany's BayWa AG said last week.
Blockchain on the Brink?
Commodities markets from oil to metals are looking to use the technology to modernize trade and cut costs, but progress has been limited. The grain conference is dedicating panels to blockchain, and the world's biggest agricultural merchants last month said they're working together to standardize and digitize trade.