Agribusiness News January 2025 – Cereals

Political alliances define trading blocs

The recent grain trade conference in Dubai highlighted the deepening fractures in global economic and political systems. The decline of globalization is giving way to a “duopoly” of power, with the G7 nations (Canada, France, Germany, Italy, Japan, the UK, and the U.S.) on one side and the BRICS bloc (Brazil, Russia, India, China, and South Africa) on the other. Each group accounts for roughly 30-32% of global GDP, signalling a shift in trade flows and economic influence as Washington and Beijing emerge as dominant global poles.

The rise of the BRICS bloc is now outpacing the G7 in GDP growth and prioritizing the development of independent trade routes and frameworks that reduce reliance on Western markets and the U.S. dollar. Russia has become a leading price-setter for internationally traded wheat, while Brazil has solidified its dominance in soybean and corn exports, aided by competitive pricing and political ties within BRICS. At the same time, China has diversified its suppliers, reducing its reliance on U.S. grain and soybean exports and shifting its purchases to South America and Russia. This trade realignment, driven by political strategy rather than price, underscores the diminishing influence of the U.S. in global agricultural markets and these trends reflect a broader effort by BRICS nations to reduce dependence on Western markets and redefine global economic power structures. This geopolitical restructuring is forcing many agricultural players in the United States and the European Union to consider the nature of future demand, and how they can stay competitive in an increasingly divided world.

Black sea region supplies diminishing

This week, world wheat prices have rebounded amid lower Black Sea export prospects for the second half of the season. Wheat prices in Ukraine are now trading at season’s highs and in Russia prices are moving up for the first time since October and are now trading at parity with EU

offers. Russia’s export volumes have already started to slow down significantly since mid-November having exported record volumes so far against a backdrop of a 12Mt lower production compared to last year. Russia has also set a very small quota of 11Mt for the Feb-June period (compared with 29Mt in 2023 for the same period) and they have also increased the export tax by 30% to $50/t. Meanwhile EU exports have been very slow so far this season currently at 10Mt vs 14Mt this time last year. Hopefully demand will increase as Black Sea supply slows and if demand lifts EU prices, UK prices will follow.

UK barley and oats

Malting barley markets remain sluggish, with weak demand from brewing and distilling industries keeping premiums at multi-year lows. Ample supply and poor demand make it difficult to justify malting prices significantly exceeding feed barley as the new year approaches. The preliminary findings of the Early Bird Survey for the 2025 harvest indicate a decline in the total UK barley acreage, attributed to reduced plantings of both spring and winter barley. If confirmed, the projected area of 1,084,000 ha would mark the smallest UK barley area since 2014. One contributing factor to this decrease is believed to be the pressure seen on malting barley premiums this season.

European oat markets are similarly quiet, with limited trade activity. In Scandinavia, a shortage of farmer selling has kept offer prices high, but these could fall if more sellers enter the market, especially as many consumers report having adequate supply. Feed demand remains subdued, both in the UK and Europe, with limited farmer selling and slow consumer interest. UK milling buyers are mostly covered for December and January, but some demand exists for later months. UK oat exports are off to a slow start, down 93% year-on-year, but are expected to pick up with recent EU sales. For now, oat prices remain supported due to the lack of farmer selling.

mark.bowsher-gibbs@sac.co.uk