Confirmatory evidence of a new bull market in soft commodities is increasingly visible. According to Reuters, the Brazilian government has decided to remove temporarily import tariffs on rice, corn and soybeans. The move aims at fighting inflation, as prices for the three products have risen in recent times. The move in corn prices in particular, is notable. Our own ‘on the ground’ intelligence has reported significant concerns over the Ukranian crop. Dry weather and lower production is pushing prices up – offers for Oct-Nov delivery have exceeded $180 USD – China is paying a healthy premium in its bids at the moment too to secure product.

We therefore expect political intervention to limit exports ultimately and hence prices remain elevated.

Another interesting development – Moldova has had such a poor crop this year (meaning very high domestic prices), that it has begun to import from Ukraine. Therefore, if exports continue at the current clip, we anticipate over 9MMT of Ukranian corn exported by the end of September and 12MMT before October is out, this will all serve to put a bid beneath domestic prices, leading to the domestic millers crying foul, during the run up to national elections. We therefore expect political intervention to limit exports ultimately and hence prices remain elevated. Corn prices have further benefitted from ‘managed money’ in the futures markets, as funds have had to reduce their short positions too. The ongoing political tensions between China and Australia have seen Argentinian barley shipments to China build after a 3 year lull in a trade flows. Historically, Argentine feed barley is shipped to Saudi Arabia, where it is used to feed camels, while its beer barley has gone mostly to South American brewers. Argentine barley exports to China next year could reach as much as 800 KMT depending on prices and the Australia-China trade relationship. We’re also seeing prices creep up in wheat values. The tenders just passed, GASC (Saudi), Jordan no doubt helped, and we expect to see another 3 to 5 USD on the upside in values. Activity has included red lentils out of Canada, and both Indian refined White Sugar and Brazilian bagged White Crystal Sugar. We are currently developing flax and sunflower seed trade flow into northern European buyers in both Belgium and Germany too.