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Top agricultural trader predicts “mini super cycle”

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According to some of the world’s top traders, agricultural products are at the beginning of a “mini super cycle”, and demand for China and biofuels is expected to drive up prices in the next few years.

Executives from Cargill, COFCO, Viterra and Scoular said this week that the corn, soybean and wheat markets will remain strong in the next two to four years.

Prices have fallen from multi-year highs in the past few weeks as the U.S. dollar has risen and rain is expected in the Midwest, but corn futures prices have doubled from a year ago, at $3.29 per bushel, and soybeans at $14.31 per bushel. 65 cents rose, wheat rose nearly a third, to 6.54 US dollars.

“We will definitely see a mini-supercycle,” said David Matisse, chief executive of Glencore’s majority-owned Viterra. FT Commodities Global Summit“We are in a demand-driven environment with the themes of population growth, wealth growth, and people spending more. In addition, our demand for plant fuels is also increasing.”

Rising prices are a boon for farmers who have felt the financial pressure of stagnating crop prices for several years.However, this will mean Higher food costs For food and oilseed importing countries, especially poorer countries struggling with the economic impact of the pandemic and rising food prices.

After the government and enterprises, the grain and soybean market experienced substantial growth in the second half of last year Hurry up During the epidemic.China where the corn harvest is not good Bulk purchases, Last year, a record 11.3 million tons were imported, of which more than one-third came from the United States.

Alex Sanfeliu, head of Cargill’s Global Trade Department, said that the two big harvests of corn and soybeans — one in the United States and the other in Brazil — mean that the super cycle of grains and oilseeds is often faster than Other crops are short, but he predicts a bull market in the next two to four years. “The characteristics of the super cycle are there,” he said.

China imported a large amount of corn last year, which was previously aimed at achieving self-sufficiency, which surprised traders and analysts and sparked a debate about whether this is a “restock” after the pandemic shock or whether it will continue to purchase.

Several executives believe that this gap will persist, pushing the rising force to continue importing corn. Marcelo Martins, head of grains and oilseeds at COFCO International, the trading arm of the Chinese state-owned conglomerate, said there was an imbalance on the supply side due to poor harvests. “[The supply deficit] Stay here,” he said.

At the same time, Paul Maas, chief executive of US agricultural trader Scoular, said that the demand for biofuels, which is driving the price of soybeans and soybean oil, is “unprecedented”. As governments push to reduce the use of fossil fuels, many governments are increasing the amount of biofuel blended into gasoline. “The increase in demand is real, and we are at the forefront of observing how it all develops,” Maas said.

Despite the enthusiasm, Gary McGuigan, head of global trade at Archer Daniels Midland, added a warning. “In the past few weeks or so, we have seen a considerable price pullback,” he said, adding that while the demand dynamics are “definitely changing,” it is still too late to call this a mini super cycle. Too early.

One of the biggest uncertainties is China. “Of all the large demand-driven regions in the world, China is the most opaque and the most unpredictable,” he said.

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