The two-hour phone call between Trump and Putin is keeping the grain market busy. The hint that the US wants to improve relations with Russia is a bearish signal for the grain market, according to analysts. On the wheat market, analysts are concerned about the drought on the southern prairies in the US. With three months to go before the combines can go outside again, the wheat there is in dire need of rain.
The May wheat contract on the Matif closed yesterday €2,25 lower at €222,25 per tonne. On the Chicago exchange, grains also took a step back. Wheat closed 0,6% lower at $5.65 per bushel. Corn made a similar move and closed 0,5% lower at $4.58¾ per bushel. In soybeans, the decline was limited to 0,3% and closed at $10.12¾ per bushel.
It is not often that a phone call is as much ado about as the conversation between Vladimir Putin and Donald Trump. There was a lot at stake. Incidentally, it started well with Putin making his American counterpart wait an hour before picking up the phone. After the conversation, Trump called it a 'very good and productive conversation' on his own social media platform Truth Social. Not everyone agrees with that. Trump called for a general ceasefire for thirty days, but Putin did not want to go any further than a halt to the attacks on energy supplies in Ukraine, to name but one thing.
The fact that the US and Russia are again in talks and even discussing the normalization of relations between the two countries is seen by analysts as bearish signal for the grain market seen. With an end to the conflict and a reduction of sanctions against Russia, the security of supply of grains from the Black Sea region on the world market is improving.
clearing
Wheat prices on the Russian market are under pressure, according to SovEcon. According to the agency, this has little to do with geopolitical developments. Russian farmers are now offering extra wheat before the spring work begins. Wheat exports from the EU continue to falter. Up to and including 16 March, 14,92 million tonnes of wheat have been exported, according to the latest figures from the European Commission. This is 12 million tonnes less than last season over this period.
Drought on the prairies
The weather in the US is creating a certain steady undertone in the wheat market. In the largest winter wheat state of Kansas, 48% of the area is in good or excellent condition, according to the USDA. Last week, that was 52% of the wheat area. According to the ministry, the wheat has deteriorated due to drought. In Texas and Oklahoma, 28% and 46% of the winter wheat are in good or excellent condition, respectively. That is the same as last week. The winter wheat is now coming out of its winter dormancy and is starting to grow again. Sufficient moisture is needed for a good yield. That is currently lacking and according to the weather reports, that will not change in the next ten days.
In corn and soy, the trade war continues to hang over the market like a dark cloud. The only problem is that no one knows where they stand. For the export of corn, the US is heavily dependent on Mexico, the EU and China. For soy, analysts are looking ahead to the relationship with China. The fear is that if Trump actually imposes the proposed import duties on April 2, corn and soy will fall victim to countermeasures.