World: Physical grain markets follow futures only hesitantly

World grain futures markets jumped up and down in December-January; wheat ended down from December 1 levels, corn up, and soybeans sharply up, H. M. Gauger GmbH reported earlier in February.

Physical markets followed futures hesitantly, wheat and barley hardly at all. There are no general, but serious local shortages of grain. Supplies in the vegetable oil sector are critical. There are famines in African and Arab countries, serious food inflation even in the richer countries of the world, countered by alleviated import rules, export restrictions, quotas and taxes.

The southern hemisphere has harvested excellent wheat and barley crops. Extremely cold and dry weather in the U.S. Midwest affect the prospects of the winter wheat crop; drought conditions in large parts of Argentina and Brazil (la Nina) reduce forecasts of the corn and bean crops. European winter weather, however, has been benign to-date.

The corona pandemic and resulting labour shortages, logistics, and freight disturbances, lockdowns continue to trouble the world. The energy crisis has already led to sporadic production losses and threatens to impact severely the economy and public life. In case of a Russian invasion in Ukraine and a Western (economic) response, the effect on commodities, financial markets, navigation is unforeseeable yet.