Elena Faige Neroba Business Development Manager Maxigrain We have turned a new page on the calendar, but it looks like the grain markets are heading up again after a short break. The meteoric rise in commodities, indices and cryptocurrencies is accompanied by political tensions in the United States. But time will tell whether American history will grow from a show into something real. We should now observe the weather in the Southern Hemisphere, wait for how China will behave and worry about the state of the economy in Argentina and Brazil.

CORN

The ban on sales of Argentine corn until March 1 caused a deficit of 4.27MMT in the market. Farmers' organizations are calling for a strike on January 11-13 and not to sell grain in protest. Concerns about potential crop cuts in Argentina and Brazil, combined by 7-14MMT from initial estimates, are intensifying as there has been insufficient rainfall. Several terminals in Argentina were on strike even after the government has been declared that the problem is solved. It will take 25-28 days to clean up the aftermath of the three-week strike. We managed to agree with the terminals after three weeks, but the farmers are ready to defend their right to free trade. The government, which is already unpopular after the return of export duties, is trying to hear from farmers, but due to a poor wheat harvest, the ban on corn exports may not only be lifted but also apply to other types of grain. Production in Argentina is estimated by the Rosario Exchange at 16.5MMT against the USDA forecast of 18MMT, and exports may be 9.6MMT against 12.5MMT, respectively. The difference in estimates of almost 3MMT may significantly support prices if the US Department reduces the forecast given the actual low yield. AgResouсe reports that exporters purchased 6.5MMT, of which 1MMT with a fixed price upon delivery. As per Platts, Argentina's Energy Secretariat said it has authorized a gradual 91% increase in biodiesel prices and 56% in ethanol prices for refiners. A key challenge for Argentina's refiners in 2021 is likely to be low or even negative refining margins due to soaring production and logistics costs. In addition, processors in Argentina are expected to face restrictions on the supply of raw soybeans in 2021, as the government's foreign exchange control policies discourage their sale to farmers. Production can be about 46MMT. Analysts expect Argentina's oil meal and oil export forecasts to be revised in the coming months due to restrictions that Argentine processors will face in 2021. Since January 1, export duties have been restored to 33% for soybeans, 30% for meal and 31% for soybean oil. Conab said that refiners in Brazil faced strong demand in 2019-2020, with an estimated refining volume of 48.9MMT, up 10% from last year. Domestic refining demand is expected to remain strong at 49MMT in 2020-2021. Production of Brazilian beef and pork is expected to rise on the back of continued strong exports to China and stronger domestic demand, he added. The higher blending mandate is expected to boost biodiesel demand in Brazil in 2021. In March 2021, the mandate will increase to B13 (blend ratio 13%) from the current B12. More than 80% of the vegetable oil used for the production of biodiesel in Brazil. Analysts also expect increased domestic demand will lead to a decline in Brazilian soybean meal and oil exports in 2021. Сhina continues to maintain that weather conditions have not affected corn production and stocks have not been affected. But growing demand from pork producers is pushing domestic prices higher. Bloomberg speculates that China could become the world's largest corn importer, although the press reported that China will increase its corn planted area. In addition, rumors that China could significantly increase shipments of Brazilian corn have returned to the market. Currently, sales do not exceed 70kMT per year due to the phytosanitary requirements of the Chinese side (the use of certain herbicides in weed control). As a result of the price rally in Chicago, American corn caught up in price with Ukrainian corn in one of the key markets - China, according to Сofeed. From 2024, Mexico introduces a ban on the import of GMO corn. It is not clear whether this measure will affect fodder corn. Mexico today is a key buyer in the world and the United States clearly does not like this step. In the second decade of January 2021, a significant flow of cold air mass may rush to Europe and may create unfavorable conditions for sowing winter crops and the Black Sea region, despite mild winter weather earlier, weather models of Refinitiv show. At the beginning of 2021, weather conditions were quite favorable for winter crops in the Black Sea region. Thus, the air temperature was 3-7 ° C higher than normal both in Ukraine and in the south of Russia. The level of precipitation in some regions of Ukraine may even exceed the norm, while in the south of Russia there is a deficit of precipitation. Precipitation will mostly fall outside of snow due to high air temperatures, leaving most of the major producing regions without snow cover. Despite the fact that the areas in Russia have been increased, 22% of the crops are in good condition, and so far the forecasts for the next harvest are not optimistic. In Ukraine, the area under wheat has decreased. Most likely, about 200 thousand hectares will be sown in the spring, and the area under corn and sunflower will increase. In any case, it is too early to give definite figures. It is also worth watching to see if China tries to change the terms of Phase 1 with the new US government, as they have already been cautious about this. Targets under a one-year-old treaty have not been met, and "there are many fish in the ocean" (although not for a week). It looks like the market may have a hole in the balance of supply and demand for corn and soybeans in the coming weeks, and the uncertainty over the new wheat harvest and the general bullish sentiment will also contribute to the rise in prices. In any case, the market may partly calm down during the Chinese holidays, but it will be preceded by the resolution of the political situation in the United States. We are still waiting for certainty in the level of demand from China - it looks like they need far from 17MMT of corn. Separately, it is worth identifying a more global issue - how the world economy will get out of the crisis. It is believed that we are entering an era of high prices. Yes, high prices are treated with high prices, but will people who are capable of much out of boredom have enough patience? Economists distinguish several types of recovery, comparing them with the letters of the Latin alphabet, because the nature of the market movement is very similar to their outline. A V-shape in which the rebound is as swift as the slump was the favored trajectory early on, but now more are starting to worry about a U-shape. The most pessimistic are looking at global growth tracing an L or a W — or a more mangled path that bears little resemblance to Roman letters. But recently a new "letter" has appeared - K. Imagine that the horizontal line is the starting point - the beginning of the crisis. We were in it a few years ago. But the sinking global economy has divided the world into rich and poor. And I'm not talking about people. We are already talking about countries. Now rich countries, not without the help of the state apparatus, can begin to recover, while in poor countries, in addition to corruption, there is a problem of mismanagement and everything will only get worse. Some of the world's economies have gone up, and some have gone down К. Against this background, in the long run, the issue of food security arises. Those who go up will be able to pay for quality food, and organics, among other things, will not become a fashion trend, but a symbol of class affiliation. Poor countries will switch to GMOs, because the climate is changing and you need to adapt to it. Obviously, we turned the page and started a new section of our book.