Last week’s stocks report estimated that the US had 219mt of maize as of March 1st. As the US grew about 345mt last year, this means that they have 63% of last year’s harvest unsold.

With South America busily exporting its own newly-harvested maize, and with a strong $, US exports may be stymied. The $ will be the main determinant of the success or failure of US exports. However, Mexico is one of the world’s biggest maize importers – some 14mt per annum, but as the US is building a wall, Mexico may decide to buy from the South rather than the North. US soya stocks were put at 47mt at 1st March, 44% of its 107mt crop.

The soya to maize price ratio is currently about 2.5, which has an influence on farmers’ planting intentions, as does the weather. It seems that farmers intend to plant 90m acres of maize (4m less than last year) and 89.5m acres of soya (6m more than last year).

In this week’s USDA supply and demand report, Brazilian maize production was increased 2mt to 93.5mt; world ending stocks were raised by 2mt to 223mt. With supplies of wheat rising and use declining, global ending stocks were raised 2mt to 252mt. World ending stocks of soya were increased by 4.5mt to a record 87.5mt (10mt more than last year).

Brazilian soya production was put at 3mt more than last month at 111mt, with increased production in Paraguay, Uruguay, and Argentina (see AHDB graph). The Brazilian soya harvest is 82% is complete (5-year average 78%). Argentina’s soya harvest has started despite heavy rains and is about 6% complete, some 56.5mt expected. China believes it will need 86.5mt this year.

The funds have been extremely active in recent weeks; in the 6 weeks to 4th April the funds sold 15mt wheat to leave them 19mt net short, 30mt maize to leave them 19mt net short and sold 20mt soya to leave them with a zero net position.

What is it about China and trains? In the news this week, a UK train loaded with UK goods – destination China. Then came news that Russia intends to supply China with 1-2mt wheat every year - by train. We presume that on the basis that ‘my enemy’s enemy is my friend’, China has decided not to buy US grains and import from Russia instead?

'My enemy’s enemy is my friend' is often and incorrectly attributed to Sun Tzu’s 'Art of War'. The quote is actually from the ancient Indian work the 'Arthashastra' dating from the 4th Century BC. The work comprises 15 books, 150 chapters and 180 topics and sets out a legal framework for running a country (courts, laws, officials, marriage, agriculture, industry, taxes, punishment etc), economics and military policies (types of war, strategy, spying, propaganda, morale, war, assassination, etc).

Happy Easter!

Regards,

Paul Poornan & Martin Humphrey