Analysis Grains & Commodities
Trump is backtracking a bit
With Trump, you don't know where you stand. In the first battle in the trade war, the US is gradually pulling back. For the American grain trade, that's not bad, by the way. Prices on the CBoT are recovering somewhat after the hard blows earlier this week. Furthermore, it's the weather reports that keep things lively. Incidentally, people in the US are more concerned with that than in Europe.
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Choose the subscription that suits youThe March wheat contract on the Matif closed yesterday €4,25 lower at €211 per tonne. The most heavily traded May contract closed €0,25 lower at €222,75 per tonne. The mood on the Chicago exchange was much more positive. Wheat closed 1,2% higher at $5.37 per bushel. Corn was even more firmly in the plus with a rise of 2,1% to $4.49½ per bushel. Soybeans were nicely among the grains and rose by 1,6% to $10.14 per bushel.
If it had not had such far-reaching consequences, you could now call Donald Trump's policy a farce. The import tariffs that were announced with much fanfare and introduced at the beginning of this week are being weakened by the day, it seems. Earlier this week, it was the top executives of the major American car manufacturers who convinced the president to make an exception for their industry in order to limit the damage to the average American citizen. Yesterday, a phone call from Mexican President Claudia Steinbaum was enough to change Trump's mind. For all goods that fall under the USMCA (the successor to NAFTA), the 25% import duty is postponed by a month until April 2.
It is difficult to estimate what Trump will and will not disrupt, but several analysts cautiously assume that the soup surrounding the trade war is not as hot as it is served. It is going too far to say that it will end with a fizzle, but traders are breathing a sigh of relief, especially for corn and soy (of which serious volumes go to Mexico).
Drought in the American wheat belt remains a problem. The drought monitor shows that it remains dry, especially on the northern prairies. And the dry weather will continue for a while, if the weather reports prove to be correct. Analysts are not immediately concerned about the colored parts of the corn belt. Rain is coming to the area and, not unimportant, it will also take some time before the corn and soybeans have to be sown.
In Europe, there is some cause for concern about the state of winter wheat, but the Matif seems to be immune to this. In northern France, the wheat is doing only moderately well after a wet winter. Further east in Romania, Bulgaria and the Balkans, drought has been raging. On the other hand, in Germany and Poland, for example, the winter wheat is doing relatively well. From that perspective, it is not surprising that the Matif remains fairly stable.