In European politics, there is panic now that US military support for Ukraine is in jeopardy. On the (financial) markets, it is mainly the trade war that is making players nervous. After the conclusion of the Matif and CBoT, Trump announced that he would introduce an import duty of 25% for Canada and Mexico as of March 4 (today). He also imposed an additional duty of 10% on China. Both Canada and China have responded with countermeasures. This seems to have made a trade war a fact.
The March wheat contract on the Matif closed yesterday €4,25 lower at €217,50 per tonne. On the CBoT, wheat lost 0,9% to $5.32 per bushel. Corn was the biggest loser last trading session, closing 2,9% lower at $4.40¼ per bushel. Soybeans were also in the red, down 1,3% to $9.98¼ per bushel.
The big news for the grain market (and financial markets in general) came at the end of the day, after the CBoT closed. As of today (Tuesday, March 4), Donald Trump has imposed a 25% import tariff on a wide range of products from Canada and Mexico. In addition, Trump has increased the tariff on products from China by 10 percentage points to 20%. This tariff is on top of the existing tariffs on products from China. "While President Trump has given Canada and Mexico ample opportunity to address the dangerous cartel activities and the flow of deadly drugs into our country, they have failed to adequately address the situation," writes the Witte Huis when announcing the levies.
Countermeasures
China responded very quickly to the US increase in import duties. Beijing announced today that it would impose a 15% duty on poultry, wheat, corn and cotton from the US. In addition, there will be a 10% duty on sorghum, soy, pork, beef, fish, vegetables, fruit and dairy products. In addition, the Chinese Ministry of Commerce announced that fifteen American companies will be added to a list that Chinese companies will no longer be allowed to supply to.
During a regular press conference of the Chinese Foreign Ministry, the ministry spokesperson said that China will fight to the bitter end if the US sets its sights on a tariff war, a trade war or any other form of war. "I want to reiterate that the Chinese people have never been afraid of evil or ghosts, and we have never given in to bullying. Pressure, coercion and threats are not the right ways to deal with China. Trying to exert maximum pressure on China is a miscalculation and a mistake," the spokesperson was quoted by several media as saying.
Canadian Prime Minister Justin Trudeau said hours before Trump's decision was announced that Canada can respond immediately to trade restrictions from the US with tariffs on $30 billion worth of US goods. A second package could come on March 25, hitting $125 billion worth of US goods. "Canada will not let this unjust US policy go unanswered," Trudeau wrote in a statement.
The imposition of tariffs yesterday does not seem to be over yet. Last week, Trump signed an executive order to investigate unfair trade practices in the forestry and timber industry. Yesterday, he hinted at additional tariffs on agricultural imports to stimulate domestic sales. Furthermore, there are still trade barriers for the EU hanging over the market.
Military support
Other news from the White House is the uncertainty about American support for Ukraine after the row between Trump and Zelensky last Friday. According to the White House, Zelensky is not prepared to compromise on a ceasefire. Military support from the US is therefore in jeopardy and Trump wants to suspend the delivery of weapons and other promised support. Ukraine desperately needs that support, as evidenced by the attack on the important grain-handling port of Odessa last weekend.
Australian wheat harvest bigger than expected
We almost forgot, but besides the news from Washington, Beijing and Ottawa, there is of course more going on in the grain market. Abares, the statistics and research service of the Australian Department of Agriculture, has increased its estimate for the Australian wheat harvest for the 2024/25 season by 2,2 million to 34,1 million tonnes. This means the harvest is 31% larger than the previous season. For the 2025/26 season, Abares estimates the wheat harvest at 30,5 million tonnes.
Bulls are ignored
There is also bullish news for the wheat market, but according to some analysts, very little attention is paid to it. Rusagrotrans announced yesterday that Russian grain exports in February fell to a five-year low. Last month, 1,93 million tons of wheat were exported, according to the company.
LSEG issued a warning that hot and dry weather is expected in the major wheat growing regions of India and China over the next two weeks. In India in particular, there are concerns that wheat will become overripe and that the yield will therefore lag considerably behind the multi-year average. India already has a tight wheat supply and could be forced to import wheat if the yields of the coming harvest are disappointing.