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New Delhi — Global grain exports could see less intervention by major agriculture producers in 2020-21, despite the food supply chain risks in the event of a second wave of the coronavirus pandemic, Abdolreza Abbassian, senior economist with the Food and Agriculture Organization, told S&P Global Platts in an interview.

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"Putting export restrictions in the current environment and in the 2020-21 season [by major producers] is quite unlikely. I don't see a problem there. What I do see a major issue is in some countries, [especially which are price-sensitive and economically weak], may want to come into the market and buy more grain than they usually do, because they are worried about the second wave of the pandemic," Abbassian said.

After the pandemic concerns rose in March and April, countries like Russia, Kazakhstan, Ukraine and Vietnam placed export curbs on commodities like wheat, wheat flour and rice, sending the market into a tizzy.

Russia, the world's largest wheat exporter, placed a quota on exporting only 7 million mt of grains between April and June.

There was a bit pressure on those countries because of factors like big sales, weaker currency and huge demand, and policymakers got a little bit panicked about if all of their grains end up in the world market, while they have nothing for their own use, Abbassian said.

"But this was a false start, because the situation is not [like in] 2007 and 2010. This situation is very different, other suppliers were there...and one after another those temporary measures were lifted and suspended," he said.


The disruption was more on rice supply side after Vietnam restricted exports in March and placed export quotas for April shipments fuelling a price surge, but eventually lifted the curbs.

India, the world's largest rice exporter, did not place any restrictions, but there were some problems in shipping due to lockdowns, and the market was also tight because of the drought situation in Thailand.

S&P Global Platts assessed long grain white rice 5% broken FOB Thailand rose 22.1% in April from February levels, to $525/mt, while long grain white rice 5% broken FOB Vietnam surged 21.3% in the same period to $455/mt.

People were worried that the market would revisit the situation seen in 2007-08 and 2010, which was very much triggered by export restrictions of rice, Abbassian said.

In 2007-08, despite ample supplies, rice prices tripled in the span of just few months after major exporters restricted supplies to the global market.


At the beginning of this pandemic, consumers were rushing to supermarkets, and producers were expecting future price gains if they could hold the food a little bit, Abbassian said.

"But fortunately, I think this kind of [situation has] disappeared, and people realized that this is just a new norm, that food supply is not the issue," the economist said.

While exporters placed restrictions on supplies, buyers of staple grains showed urgency to secure food supplies, especially in March and April.

Importers like Morocco removed duties on wheat imports, while Egypt accelerated its purchase of wheat at a time when the country was going through a wheat harvesting period, surprising the markets.

"[Grain importers] are trying to rebuild inventories, and to make sure, that tomorrow if [they] have logistical problems that result in a disruption of trade, they have enough food to basically go through those difficult months when they don't have access to world market," Abbassian said.

Egypt's state-run agency General Authority for Supply Commodities in February through April booked 720,000 mt of wheat through tenders, according to market data. GASC on June 1 again came out with a tender notice, seeking 55,000-60,000 mt of soft milling wheat for July shipments.

Egypt earlier said they need to import around 800,000 mt during the harvesting period (April-July) to boost strategic commodity reserves.

"The problem I see in this approach is that if many countries do the same [rushing to the market to secure food supplies], you would [see] quite an increase in prices across the world," Abbassian said.

But then, hopefully if the second wave does not happen, or there isn't a major crisis, there could be a sudden collapse of prices later on, because there won't be much demand from the countries those had sought to boost imports earlier, the economist said.

But he is worried if a second wave arrives at key global agriculture producers.

"Then there maybe even some [trade flow] interruptions at the international level," Abbassian said.


Brazil, the world's largest soybean exporter and fourth-largest pork exporter, has been lately facing issues with transporting food products within and to the ports.

Brazil has seen a surge in the number of coronavirus cases in recent weeks, raising concerns in the supply chain industry.

"What should need to be worried about whether or not at some point in the near future [the growing number of cases] may again create disruption in food transport internally and externally," Abbassian said.

"Here we are not just talking about just any country, we are talking about a country that basically is feeding China, and is very important not just for grains and oilseeds but also for livestock," the economist said.

China's total pork imports from Brazil in 2019 rose 23.3% year on year to 479,427 mt, data from Brazilian Association of Animal Protein showed.

The African swine flu crisis that started in China in 2018 continues to create favorable environment for Brazilian pork sales to Asian nations, the association said.

China also heavily depends on Brazil to cover its soybean demand. Brazil is expected to ship about 66 million mt of beans to China in 2019-20 (February 2020-January 2021), according to Aprosoja Brazil's latest estimate.