Analysis Grains & Commodities
Fear of frost damage subsides on wheat market
Grain prices on the futures markets took a step back in the last trading session. Partly, this is due to speculators who have stepped out after the rally of the past few days. Fears of frost damage in the US have also subsided somewhat. Trump did not help the mood on the grain market either. He seems to be seeking some rapprochement with Russia at the expense of Ukraine and the threat of import tariffs also flared up again.
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Choose the subscription that suits youThe December wheat contract on the Matif closed yesterday €1,50 lower at €228,25 per tonne. On the CBoT, wheat fell more sharply, closing 2,1% lower at $5.92 per bushel. Corn and soybeans also took a step back, but losses were limited. Corn closed 0,9% lower at $4.97½ and soybeans closed 0,6% lower at $10.31¾ per bushel.
The decline in wheat on the CBoT is partly attributed by analysts to speculators who took their profits during the last trading session. Another factor is that the fear of frost damage in the US is easing somewhat. The cold has not yet gone away, but a protective blanket of snow lies in a large part of the American wheat belt. Snow fell again yesterday. In upper Texas, western Oklahoma and southwestern Kansas, wheat remains vulnerable to damage from the cold, according to local sources. Analysts point out that the true extent of any frost damage will only become clear later in the season. That could still provide a surprise.
The talks between Russia and the US about peace in Ukraine are causing some unrest in the background on the grain market. The attitude of the US towards Ukraine and Russia has completely changed under Trump, who has been in the White House for a month now. Trump at least gives the impression of being more in line with Putin by, among other things, calling for elections in Ukraine and more or less accusing Kiev of starting the war. Continued American support for Ukraine is therefore no longer a given. The fact that Trump is more or less hinting at normalizing relations with Russia seems most relevant for the grain market in the short term.
The US president also left his mark on the markets in another way. Yesterday, there was talk of import duties again. Trump would like to impose a 25% duty on cars, semiconductors and pharmaceutical products. The chance of a trade war and protectionism that this would cause had a price-depressing effect on the commodity and grain market.