The threat of a trade war between China and the US continues to hang over the grain market like a dark cloud. On top of that came the news yesterday that China wants to postpone the import of 600.000 tons of wheat. The weather in Brazil just won't cooperate for a smooth soybean harvest. Still, the market doesn't really react to that.
The March wheat contract on the Matif closed yesterday €4 lower at €231 per tonne. Wheat also took a step back on the CBoT, closing 0,8% lower at $5.72¼ per bushel. Corn lost 0,3% to $4.93¼ per bushel. Soybeans were the biggest loser on the Chicago exchange during the last trading session, closing 1,7% lower at $10.57 per bushel.
Doubts about the demand for grains from China are causing some pressure on the market. News agency Reuters reports that China is postponing the import of 600.000 tons of wheat or wants to resell it. A significant part of the wheat is said to come from Australia. With the better than expected harvest in Australia, the disappointing demand from China comes at an unfortunate time.
The threat of a trade war that could be unleashed by Trump is not doing much for confidence in the grain market. Washington introduced an export tariff and Beijing responded earlier this week with levies of 10% and 15% on certain products including coal and agricultural machinery from the US. While a trade conflict with Canada and Mexico has been averted for the time being by talks and commitments, there has been little movement between China and the US. Trump and Chinese President Xi have not spoken since the announcement of the Chinese trade barriers
South America weather offers opportunity for US soy exporters
Although it is not apparent from the CBoT price, the weather in South America offers an opportunity for American soy exporters. In Brazil, the soy harvest is delayed by rain. In the western and central parts of Brazil, there is no permanent dry weather forecast yet. Soybeans are therefore coming onto the market later, not to mention the consequences for quality. The sowing of the next crop of corn is also delayed.
Rain in dry parts of Argentina had a greater effect on the psyche in this respect. In the northern provinces, approximately 25 to 100 millimeters fell. Whether the crops can profit maximally from this splash of water relatively late in the growing season is another matter. Incidentally, the dry and warm weather is returning to Argentina according to the meteorologists.