Russia Decreases Grain Production Estimate
- Russia’s Agriculture Ministry announced the 2020 grain crop might be 120 million tonnes, down slightly from 121.2 million last year.
- The Ministry’s previous estimate was 125.3 million of total grain production for 2020.
- While the wheat crop was not specified, yields are expected to decline from a year ago in Russia's three main wheat producing and exporting regions.
- Russia raised 73.6 million tonnes of wheat last year and was expected to produce 77-80 million tonnes this year.
FBN’s Take On What It Means: The Russian announcement has led to some speculation about further export quotas for the new crop. This along with some weather concerns in Europe and the US has helped fuel a sharp rebound from recent lows. FBN believes this gives producers a chance to catch up on sales as the global supply of wheat is still expected to be adequate.
China Begins to Import U.S. Ethanol
- Shipping data show a cargo of about 9,000 tonnes of US origin ethanol is expected to arrive at Nanjing on Friday.
- There is also a report of a cargo of US ethanol expected to arrive later this month at the port of Yizheng, neighbouring Nanjing.
- Tariffs on US ethanol were as high as 70% after China increased retaliatory tariffs on the US during the last year’s trade dispute, effectively halting trade.
- Ethanol imports into China have started to make economic sense as their domestic fuel price has risen in recent weeks.
FBN’s Take On What It Means: The market has been watching closely for signs of renewed trade in biofuel after China waived some additional tariffs on 696 American products, ethanol among them, to support purchases of US farm goods, after the signing of the Phase 1 trade deal. If China is going to fulfill its obligations under the agreement, large ethanol purchases to meet their fuel blending goals may be supportive to US production.
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