China caused an unexpected twist in international trade. Chinese customs rejected five ships with soy from Brazil. The soy did not meet phytosanitary requirements. The wheat price took a step back yesterday. However, there are concerns about the development of winter wheat in the US and Russia.
The March wheat contract on the Matif closed yesterday down €1,25 at €230 a tonne. On the CBoT, prices also took a step back after Tuesday's rally. Wheat closed down 0,9% at $5.54 a bushel. Corn lost 1,2% to $4.84¼ a bushel. Soybeans were among the grains and lost 1,1% to close at $10.56 a bushel.
For once, it is not Trump but China that is causing a stir on the grain market. China is not accepting five shiploads of soy from Brazil because the cargo does not meet phytosanitary requirements. According to Chinese customs, the soy is contaminated with vermin and/or pesticides, the Brazilian Ministry of Agriculture confirmed to Reuters news agency. According to the ministry, the volume is limited and the effect on the total Brazilian soy export is small. The soy comes from ADM do Brasil and Cargill Agricola SA.
According to some analysts, this is a remarkable move by China. With a looming trade war with the US, China has little interest in putting pressure on relations with Brazil. Other analysts think that this could be an emergency measure by China to manage the busy ports. In the fourth quarter of 2024, China bought a huge amount of soy in anticipation of a possible trade conflict with Trump. That soy is now arriving. China accounts for about 60% of the soy traded on the world market. Of the Chinese imports, about 70% comes from Brazil.
Winter King
In the wheat market, it is mainly the weather that is stirring things up. Cold in the far south of the US is fueling concerns about wheat wintering out. It just takes a while for any damage to become visible.
SovEcon yesterday released a new forecast for the Russian wheat harvest this summer. The agency keeps the yield forecast the same as the previous forecast at 78,7 million tons. That is the smallest harvest since 2021. Because the winter in Russia has been relatively mild so far, the damage from frost is limited. However, the risk has not yet disappeared, writes SovEcon. "Although extremely low temperatures are not predicted in the short term, the current weather situation, combined with the extremely poor condition of the crops at the beginning of winter, means that any significant cold snap could result in significant frost damage," writes Andrey Sizov, director of SovEcon, in the explanation.