Inside Grains & Commodities
Expensive dollar depresses US wheat market
The fact that the dollar is trading at its highest level in 16 months is a price-depressing factor for the wheat market. In addition, the price of soybeans continues to fluctuate considerably. The main responsible for this is US President Donald Trump.
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Choose the subscription that suits youthe expensive one dollar let hope for better wheat exports evaporate. It means that American wheat is expensive, while this product was already not very competitive on the world market; especially compared to Russian wheat.
Chicago's CBoT will continue to be under pressure from sluggish export sales, with bulging stocks as a result. This will only change if the dollar makes a downward correction. Wheat prices are also under pressure on the Matif in Paris, which is now trading at around €198,75 per tonne.
Trade war rages on
In the soybean market, the trade war between China and the United States remains a (major) problem. Without a trade deal with China, US prices will fall further. Meanwhile, President Trump is pushing the trade war to a head. According to him, there are 2 options: either even more levies or a 'big deal'.
It is important for China that soybean sowing has started successfully in Brazil. As a result, the harvest will be a little earlier, which China desperately needs if American soy refuses to buy. However, the acreage in Brazil is growing less rapidly than previously expected, which is due to transport problems. The growth is about 2,5%. As a result, the country is not taking full advantage of the trade war.
Will Brazil also cause problems?
An additional concern for China is that right-wing Jair Bolsonaro has been elected president. According to that president, China is robbing Brazil empty and the Asians are trying to control the country. Like Trump, he has a 'Brazil first' policy. This could cause problems for China. However, for now Brazil is still benefiting from the trade war: the value of soybean exports to China has increased by 22%.