Analysis Grains & Commodities
Weather affects grain market more than Trump
US President Trump attracted quite a bit of attention again. This time it was a lawsuit filed by 5 small companies against his import tariffs. There was some confusion about whether Trump is allowed to impose trade tariffs or not. Perhaps even more worrying is that the markets are not even concerned about it anymore. What is commotion in the grain market is the weather forecasts. For wheat in the US, the weather forecasters have little good news in the news, while corn growers in Brazil are off to a dream start.
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Choose the subscription that suits youThe September wheat contract on the Matif showed a small plus yesterday and closed €0,25 higher at €202 per ton. On the Chicago stock exchange, wheat was on the rise somewhat more strongly with a plus of 0,7%. The July contract closed at $5.34 per bushel. Corn took a step back and closed 0,9% lower at $4.47 per bushel. Soybean closed 0,3% higher at $10.51¾ per bushel in the last trading session.
US President Trump's trade policy continues to cause some surprise. Yesterday, there was some confusion as to whether Trump even has the authority to impose import duties. A federal court in the US ruled that the president has no authority to do so and that the task of regulating foreign trade lies exclusively with Congress. Trump relies on an emergency law from 1977, but the Court of International Trade is of the opinion that there is no emergency. This is because the US has had a trade deficit on the balance sheet for almost half a century. The case was brought by five small companies.
Market listens to it calmly
Almost immediately after the ruling, the Trump administration appealed the ruling. The US Court of Appeal then temporarily suspended the blocking of the levies. On his own social media platform Truthsocial, Trump fiercely attacked the federal court. In his usual style, he wrote about 'backroom fraudsters' and 'radical left-wing judges'. On the grain market, players no longer seem to care about news from the White House. There is a lot of noise, but in the end, things will work out, is the reasoning of traders and analysts.
Rain is not convenient
The weather is causing more unrest in the grain market. On the southern prairies, the drought is easing while further north they could still use some precipitation. According to the weather forecasters, precipitation is coming but it will not be limited to the northern prairies. In states like Kansas, Oklahoma and Texas where the winter wheat is ripening and it would be better for the preservation of the quality of the wheat if there was no rain.
For corn growers in the US, the start of this growing season is a textbook one. Sowing is going well and it is not so dry that you cannot get the crop going. In Brazil, too, the weather is cooperating for the follow-up crop of corn that was sown after the soybeans. Rain in recent days has given the crop a boost. Some sources estimate the corn harvest in the US at 140 million tons. That is considerably higher than the USDA estimate in the latest Wasde report. In Argentina, the corn is not doing all that well. The Buenos Aires stock exchange is counting on a harvest of 49 million tons and the Rosario stock exchange is talking about 48,5 million tons. Rain around the start of the harvest early this month has not done the corn any good. In some regions, for example north of Buenos Aires and south of Santa Fe, up to 170 millimeters have fallen this month. That is more than double what normally falls this month. But there is hope. From now on, a dry period is predicted and the later plots of maize can be threshed under good conditions.