The trade war that Trump has unleashed continues in full force for the time being. After the reaction from China to the import duties of last week, Trump came up with a counter-reaction yesterday. Tariffs for products from China are now rising to 104%. The effects of the trade war are also noticeable on the grain market. It is not the import duties that are causing the biggest problems, but the measures taken by the US against ships with a link there China are hurting American exporters the most. Other news comes from Russia where hail storms in the southwest of the country have caused quite a bit of havoc in, among other things, winter wheat.
The May wheat contract on the Matif closed unchanged yesterday at €224,75 per tonne. On the CBoT, prices were on the rise during the last trading session. Wheat closed 0,7% higher at $5.40 per bushel. Corn was up 1% to $4.69 per bushel. Soybeans also closed 1% higher at $9.92¾ per bushel.
A cautious sign of recovery on the stock markets has been nipped in the bud. Yesterday, Trump responded to the Chinese increase in import duties. The tariff on goods from China has now been increased to 104% by the American president. On a positive note, the White House announced yesterday that it is negotiating trade tariffs with almost seventy countries. As long as these talks are ongoing, the previously announced import tariffs will remain in effect.
Transport is pinching
Although grain prices on the CBoT are holding up, the U.S. grain trade is not immune to the trade war. It is not just the tariffs that are causing unrest, but also the extra port fees that Chinese and Chinese-built ships have to pay when they call at a U.S. port. The higher berthing fees can amount to $1,5 million per ship. "It makes the U.S. an unattractive destination for more than half the world's cargo ships," commodity trading adviser Jay O'Neil told Reuters. To avoid the higher port fees, shipowners are trying to send ships to the U.S. without any link to China. That in turn is disrupting logistics chains and increasing freight rates.
About 35% of the wheat traded on the world market goes to Asia and China accounts for about 60% of the oilseed trade. For countries like South Korea and Japan it is difficult to find an alternative to the American baking wheat in the short term. For feed grains, such as corn and oilseeds like soybeans it is easier to find alternatives and that is happening, according to several traders at Reuters.
The European export figures show little sign of a shift in demand for grain from Asia. That is almost impossible, since Trump only announced his plans last week. The EU has exported 6 million tons of wheat in the current season up to April 16,36, compared to 24,96 tons in the same period last season. Ukraine also came up with export figures and they have exported 7 million tons of grain up to April 33,20, compared to 37,09 million tons last season. Ukraine's grain exports this season include 13,26 million tons of wheat, 17,24 million tons of corn and 2,21 million tons of barley.
Russia remains market leader
Reports from Russia are coming in about weather that has caused damage to winter grains in the Stavropol region. Hailstorms and frost have caused some damage in Russia’s third-largest wheat-producing region, according to multiple sources. Growing conditions have improved further across the Black Sea region, with moderate temperatures and some rain, experts say.
Despite the war and all the problems that come with it, Russia remains an important factor in the world trade of wheat. Russia has a market share of more than a fifth in the 2024/25 season, Rusagrotrans reports to the Russian news agency Interfax. "Wheat exports from Russia are estimated at almost 40,8 million tons this season. Russia remains the leader in the supply of wheat to the world market with about 22% of the total wheat volume, excluding flour. This is less than 28% in the 2023/24 season, when 55,5 million tons were exported," Rusagrotrans said.