The trade war that Trump unleashed earlier this week is taking a new turn. The tariff on cars from Mexico and Canada is being postponed by a month and the US Secretary of Commerce announced that the import duties could also be reversed quickly. Traders at the CboT are taking heart from this. Russia provided an update yesterday on the state of winter wheat in the country. The damage caused by the frost seems to be limited, but due to the dry winter a top harvest is far from certain.
The March wheat contract on the Matif closed yesterday €1 lower at €215,25 per tonne. The May contract, which is traded the most, closed €0,50 lower at €223 per tonne. On the CBoT, wheat recovered in the last trading session, rising 2,4% to $5.30¾ per bushel. Corn and soybeans also closed in the green on the Chicago exchange. Corn ended at $4.40¼ per bushel, up 1%. Soybeans closed 1,4% higher at $9.97¾ per bushel.
Players in the grain market are trading from headline to headline. After Trump threw a spanner in the works with import duties earlier this week, his Commerce Secretary Howard Lutnick softened Trump's assertiveness somewhat by saying that the import duties on products from Canada and Mexico could be reversed just as easily. That now appears to be happening with the car tariff. After consulting with top executives from the American auto industry, Trump has postponed the tariff on cars from Mexico and Canada by a month.
In his speech to Congress earlier this week, Trump urged farmers to be patient as he tries to get China to the table for a larger trade deal than the Phase 1 agreement (the U.S.-China trade deal) from Trump’s first term in office. That gives traders hope that an end to the newly unleashed trade war could be in the not-too-distant future.
Lower Russian wheat exports
It is not reflected on the Paris stock exchange, but there was quite a bit of bullish news for the wheat market. Rusagrotrans has lowered its wheat export forecast for the current season to 40 to 41 million tonnes. In the previous forecast, Rusagrotrans still assumed Russian wheat exports of 42 million tonnes.
According to the Russian Ministry of Agriculture, 87% of winter crops are doing well, compared to 82% in the report from late January. The ministry does note that last winter was above average dry in parts of Russia. In the southern, central, Volga and northern Caucasus regions, the moisture content in the soil is the lowest in six years. How the winter grains develop depends largely on the precipitation that will or will not fall this spring.
According to the Russian ministry, the damage caused by the cold in February is limited. The temperature did drop to minus 20, but because snow fell before the cold front, the winter grains were sufficiently protected. The ministry maintains the yield forecast for the 2026 wheat harvest at the same level as the forecast from a month ago at 79,6 million tonnes with a range of 78,0 to 83,6 million tonnes. Of that, 54,6 million tonnes are winter wheat and 25,0 million tonnes are spring wheat. The total cultivated area has grown by 1 million hectares compared to last season to 85 million hectares.