There is no sign of fairly calm spring weather in the US. Snowstorms, tornadoes and dust storms, they all happened in the past few days. The weather premium in the wheat market has increased due to the extreme weather. Trump also made himself heard again. He does not intend to take a step back in the trade war. This afternoon Trump and Putin will have a phone conversation. Four NATO countries are not waiting for that and came with a striking message this morning.
The May wheat contract on the Matif closed €1 higher yesterday at €224,50 per tonne. Grains also closed in the green on the CBoT. Wheat was the biggest gainer, up 2,1% to $5.68½ per bushel. Corn closed 0,5% higher at $4.61 per bushel. Soybeans were mostly sideways, closing ½ cent lower at $10.15½ per bushel.
The weather premium on wheat has increased significantly on the Chicago stock exchange during the past trading session. A clash of cold polar air from the north and warm air from the Gulf of Mexico in the south has caused major storms in a large part of the US. Strong winds, relatively high temperatures and dry conditions are causing dust storms and tornadoes on the southern prairies. The bitter strong wind is pulling even more moisture from the already dry soil and the dust storm is also causing damage to the wheat. Where the tornadoes are passing over, this is accompanied by heavy showers and local flooding. Further north around the Great lakes It is not dust or rain that causes problems, but snow storms have raged.
A broad band from Texas to North Dakota is seeing little to no rain overall. 27% of winter wheat acreage is in drought conditions, up from 14% last year, according to the USDA. Of spring wheat acreage, 39% is in drought conditions this season, up from 30% this week last year. The dry areas are likely to widen, analysts say.
War language
There were few soothing words from Donald Trump about the trade war. On board the presidential plane, Trump told reporters that he plans to continue with import tariffs. "They're putting tariffs on us and we're putting tariffs on them." Trump also plans to continue with 25% tariffs on products from Mexico and Canada. "April 2nd is going to be Liberation Day for our country," Trump said. "We're going to get back some of the wealth that very, very stupid presidents gave away because they had no idea what they were doing."
This afternoon Dutch time Trump has a phone call with Putin planned about peace in Ukraine. A remarkable detail is that this morning four NATO countries (Poland and the Baltic States) want to withdraw from the treaty that wants to stop the use of landmines against people. The countries that border Russia and/or Belarus want to send the message that they want to use maximum resources to guarantee safety.
Domestic Policy
Moderate news also came from Russia yesterday bullish news. Market bureau SovEcon predicts that Russia will export less wheat in March. The Kremlin is looking for ways to lower flour and bread prices in Russia. Moscow hopes to achieve this goal by limiting exports. Although this is favorable for European exporters, the Matif responded only slightly to this in the last trading session.
Conflicting reports from Brazil
Players in the soy market are mainly focused on developments in South America. According to AgRural, 70% of the soy area in Brazil has been harvested. Last week, the counter was at 61% and last year this week 63% had been threshed. There are conflicting reports about the yields of soy in Brazil. For example, Conab has increased the harvest forecast for soy this month by 0,8% compared to the February forecast to 167,4 million tons. Not everywhere the soy is doing equally well. In some provinces, the amount of rain has fallen very irregularly over the season and this is reflected in the yields according to some local sources. Due to sufficient supply during the harvest and bottlenecks in transport, the prices for soy on the Brazilian market are under some pressure. According to data from Cepea, the soy prices have fallen by a few percentage points.