Reports of colder weather had a particularly strong impact on the wheat market during the last trading session. Weather models predict low temperatures for next week on both the American prairies and in the Black Sea region. And now there is hardly any snow in both areas that could protect the wheat from the cold. In the grain trade, you can't ignore Trump. Now it was his intended Minister of Trade who made some tough statements.
The March wheat contract on the Matif closed yesterday €3 higher at €234 per tonne. On the CBoT, wheat was more strongly on the rise, rising to its highest closing price since October. The March wheat contract on the Chicago exchange rose 2,8% to $5.87¾ per bushel. Corn and soybeans also closed in the green, but the gains were more limited than in wheat. Corn gained 0,4% to $4.95¼ per bushel. Soybeans closed 0,3% higher at $10.60½ per bushel.
One day after the European climate institute Copernicus declared January 2025 to be the warmest January ever, the wheat market is in the grip of the cold. In the course of next week, the weather models predict lower temperatures on the American prairies and in the Black Sea region. At the end of January, the mercury on the southern prairies locally dropped to 20 degrees Celsius below zero. Up to around 15% of the winter wheat in the area has suffered frost damage due to the lack of a protective snow blanket. It also now looks like no significant snow will fall ahead of the cold front.
There are greater concerns about what the cold will do to winter wheat in the Black Sea region. After a dry autumn, winter wheat in Russia and Ukraine has only developed moderately. Due to rain and thawing snow in the winter, wheat has recovered somewhat, but the crops are not doing great, as the chairman of the Russian Grain Union recently said. The fact that the snow has melted was good for growth in the short term, but now that it seems to be getting colder from the end of next week, the lack of snow is actually causing problems. According to local sources, there is hardly any snow and the winter grains are barely protected against the cold that is coming. Looking ahead a week is a long way as far as the weather is concerned, but especially in Chicago, players on the futures market are not reassured that it will end with a whimper.
US Trade Minister-designate wants to increase agricultural exports
The upward momentum in U.S. grain trade was further reinforced by the confirmation hearing of Trump’s Commerce Secretary-designate Jamieson Greer. Greer wants to increase U.S. agricultural exports by reopening markets that are currently closed. He cited Turkey and India as examples that the U.S. currently has no access to. Greer also indicated that he plans to launch an investigation into the “Phase 1” trade agreement between China and the U.S. that Trump signed during his first term as president in January 2020. The agreement gave U.S. grain exports a significant boost in its first year. However, China has missed many of the purchase targets set out in the agreement.