Increased demand for maize and wheat has led prices to rise rapidly over the last two months. Wheat price on the Chicago Board of Trade (CBOT) has recently reached more than a five-year high at USD 224/MT on the beginning of the month, driven by high global demand amid weather concerns due to dry conditions across top wheat-producing countries.
Meanwhile, US maize (corn) prices rallied in mid-October, reflecting the surge in wheat prices. As of 14th October, the CBOT maize price was USD 158.4/MT, the highest level in almost 12 months. Global maize prices continued to be supported by strong export demand from China. According to the US Department of Agriculture (USDA)’s announcement on 14th October, two large export sales were made to China, one of 420,000 tonnes and another totalling 264,000 tonnes for the new 2020/21 marketing year.
Chinese purchase of US maize is likely to continue to increase in the short term as the targets included in the Phase One agreement with the US are still far from being achieved. In addition, animal feed consumption is high as the country recovers from the impacts of African Swine Fever. Moreover, fears of domestic maize shortages sent maize prices on the Dalian Commodity Exchange (DCE) to a record-high, at CNY 2,575/MT on the same reported period, thus increasing the attractiveness of imported maize. This upsurge in Chinese maize price boosted investors' sentiment over greater export potential for US maize, thus supporting CBOT maize price further.
Overall, Chinese demand is expected to remain strong in Q4 2020, which is likely to exert some upward pressure on both global maize and wheat prices.