Defra cut UK harvest 2020 wheat production estimate: feed market report
UK ex-farm grain prices gained throughout December. With spot feed wheat quoted at £197.60/t and feed barley at £143.30/t, on 31 December. This has increased the discount of feed barley to feed wheat even further, now at £54.30/t. UK wheat has been following global grain prices up due to a very tight domestic supply, this has been supporting feed barley prices.
On 22 December, Defra released their final estimates for the 2020 UK crop. Reductions were seen for both wheat and barley production. The largest decline was for wheat, with production now estimated at 9.66Mt, down 475Kt from the October estimates. This is a 40.5 percent decrease from harvest 2019 and the lowest production since 1981.
This change was led by cuts to both area and yield estimates. Wheat area is now estimated at 1.387Mha, 28Kha lower than in October. UK wheat yields were pegged at 7.0t/ha, down from 7.2t/ha in the previous estimate, and well below the 5-year average of 8.4t/ha.
Saudi Arabia will cut its oil production, allowing Russia’s to grow
OPEC, Russia and other oil major producers reached an unusual agreement on production quotas on Tuesday, with Saudi Arabia committing to reducing its oil production by one million barrels a day and Russia and Kazakhstan winning relatively modest production increases.
The effect will be an overall reduction in oil production. The news pushed prices up more than 4 percent, reaching levels not seen since February. Brent crude rose past $53 a barrel, and West Texas Intermediate exceeded $50 as traders welcomed the Saudi willingness to give up some barrels in an effort to stabilize the market.
China’s natural gas demand set to hit new record
S&P Global Platts Analytics expects Chinese natural gas demand to reach 360 Bcm in 2021, up 8.4 percent from an estimated 332 Bcm in 2020. It was at 313 Bcm in 2019.
State-owned Sinopec has a slightly more conservative outlook, and expects gas demand at around 340-345 Bcm in 2021, up 6 percent-8 percent from an estimated 320 Bcm in 2020, data from its unit Institute of Economic Research showed.
China’s average annual increase in natural gas demand is expected to exceed 20 Bcm in the 14th Five Year Plan (2021-2025) and reach 430 Bcm in 2025, which will be slower than the average annual growth of 11.1 percent seen during the 13th Five Year Plan, according to state-owned CNPC’s think tank Economics & Technology Research Institute.
Demand recovery key for dairy in 2021
After a challenging year for dairy markets, 2021 is beginning with several factors that could bolster consumer sentiment, including the distribution of COVID-19 vaccines and forecasts of economic growth in most regions of the world.
“Looking at 2021, it’s really going to be a matter of demand recovery,” said Ben Laine, a dairy economist with Rabobank.
Global milk production is expected to grow but only at a moderate pace, so the question is whether life will get back to some level of normalcy and how fast, he said.
Restaurants opening, schools resuming in person and the vaccine encouraging people to get back to the next normal will be a good sign for prices, he said.
But the U.S. dairy market will also continue to be sensitive to government support, the USDA food box program, exports and COVID-19 cases, he said.
Junior miners bring abandoned iron ore projects back to life
Six years after a once-in-a-generation commodities crash forced Noble Group to close the Frances Creek iron ore mine in remote northern Australia, its new owners are restarting it.
Darwin-based NT Bullion is among a host of junior miners from Australia to Canada that are resuscitating operations abandoned by larger producers of the steelmaking ingredient.
Their bets made at the bottom of the mining cycle could prove lucrative. The price of iron ore surged 65 percent last year to a nine-year high of $166 a tonne on the back of sustained strong demand in China and supply constraints in Brazil, the world’s second-biggest producer.
“At current prices, it gets close to a $100 per tonne margin for us,” said Rodney Illingworth, managing director and co-founder of NT Bullion.
Analysts forecast prices to remain above $100 a tonne in 2021 with the four largest producers — BHP, Rio Tinto, Vale and Fortescue — unable to significantly expand production. After that, they expect prices to fall back with Brazilian supply recovering faster than global steel production.
NT Bullion bought the Frances Creek mine in 2020 from Perth-based Gold Valley Holdings, which acquired it from Noble for A$1 in 2018. It is investing A$15m ($11.3m) to upgrade equipment, process ore from existing stockpiles and begin mining. The first trains of iron ore left for Darwin port in December and are due to be shipped in January under a marketing deal with Anglo American.
About 10 lakh tonnes of sugar set for export
Exporters have started entering into contracts for sugar exports and sugar has started moving for shipments, the Indian Sugar Mills Association said.
According to the association, exporters are said to have entered into contracts for export of about 10 lakh tonnes of sugar so far.
“Considering that the world wants Indian sugar, and the fact that sugar production is lower in Thailand, EU, etc., India should be able to export its targeted volume with the support of the -6,000 per ton of export subsidy during 2020-2021 [sugar season],” the association said in a press release.
India is looking at exporting six million tonnes of sugar this season.
“India has a good opportunity to contract and export sugar till about March-April 2021, by when Brazilian sugar comes into the market,” ISMA said.
As many as 481 sugar mills have produced 110.22 lakh tonnes of sugar in the current sugar season that started in October 2020.