BMTI Dry Bulk Commodity Update (21 Sep 2020)

The EU is facing the prospect of a considerable de­cline in sugar production in 2020 after enduring a combination of extensive damage to its crop by pests and generally extensive, unfavourable weather con­ditions throughout the first half of the year. Current estimates have sugar output in the EU and Britain falling to 16.1 Mt this year from 17 Mt last year, due primarily to poor sugar beet output numbers from France. French crops are expected to produce around 15% lower than the five-year average amount this year, according to analysts at CGB.

Sentiment in the German steel sector has shown some improvement in recent weeks, according to a survey by Platts, with a cumulative score of 77 noted for steel price development in the opinion of German steel market players (with 50 being the baseline). HRC prices have improved by some EUR 70/mt over the last three months as industrial ac­tivity has slowly recovered.

Spot prices for Russian wheat continue to rise amid strong import demand, particularly Turkey, accord­ing to market sources. Wheat of 12.5% protein grade loading from Russian Black Sea ports on September discharge is currently trading at US$ 224/mt FOB or US$ 8/mt more than the week before, which was also an improvement on the two weeks before that. Wheat exports from Russia are on track to hit 5.1 Mt, says Sovecon, an all-time historical record for the month of September.

A generally poor harvest in France this year, due to poor weather and insect damage, is in danger of pushing a good number of farmers into bankruptcy, analysts are warning, however the country has also earmarked some EUR 1.2 billion in financial support for the French agricultural sector. Advisory board APCA said that in less productive areas of France, however, that have suffered multiples years of poor production, up to 15% of farmers may not survive through to the end of the year.

Last week, Egypt, world’s largest wheat importer, said that it had established a commodities exchange to start operation in the first half of 2021. The exchange, to be funded with US$ 5.78m in capital, will initially trade in wheat, oils, sugar and rice, allowing farmers and producers to make their stocks available to a wider market. The exchange said it may introduce options or futures contracts at a later stage of development.

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