Week 17: US grain sowing finally started

After the obstacles caused by the snow and cold, sowing work can start in the United States (US). Due to the good weather forecasts, soybean prices fell last week, and this decline has continued to date. The quotation on the CBoT in Chicago was around $375 per tonne.

Also the declining demand from China for American soybeans (partly due to the trade dispute) plays along. The Chinese are now buying in Argentina and Brazil, and are thus anticipating the tariffs that will be imposed on Chinese soybeans.

Soybean production in China is increasing
De soybean production in China the coming season is expected to increase by 12,8% compared to last year. It would mean that 14,6 million tons of soy will be produced this year. In addition, soybean imports from China will remain high. 

The country imported almost 100 million tons last year, a record amount. On the other hand, the Chinese Ministry of Agriculture expects that more soy will come from South American countries this season, instead of imports from the US.

(Text continues below the chart)The soybean quotation on the CBoT in Chicago is falling, partly due to the trade conflict.

Recovery of wheat
The weather also caused wheat prices to drop. Although rain did fall, it was not enough to restore crops. Influenced by the new weather forecasts, wheat traded higher on the CBoT. The news that Argentina will grow significantly less wheat because the weather conditions for sowing are unfavorable also supported the wheat price.

The share of wheat in good condition in the US is currently just under 30%, compared to 54% in this period last year. The sowing of wheat is also lagging behind; only 3% has been sown. This while the 5-year average is 25%. This has everything to do with the fact that this is the coldest month of April has been since 1950.

(Text continues below the chart)Wheat prices on the CBoT and Matif recovered slightly this week.

Sow corn
Corn sowing is now starting in the US. It USDA (US Department of Agriculture) reported that approximately 5% of crops have been sown. This is considerably behind previous years, when approximately 15% had been sown at this time. It caused corn prices to rise and is now trading at $150 per tonne.

(Text continues below the chart)Corn has also recorded an increase on the CBoT since the beginning of this week.

Trade conflict expands
The trade conflict between China and the US is becoming increasingly serious. This week it was announced that the Chinese import tariffs (180%) on sorghum have significant consequences. About 5 ships carrying sorghum, heading from the US to China, changed course to Saudi Arabia. The fear of the trade war overshadows the grain market.