Wheat fell to its lowest level in eighteen months on the Matif during the last trading session. The recipe for this is well known by now. In Australia, the financial market regulator issued a multi-million dollar fine for suspicious transactions on the wheat futures market there. While Labor Day was being celebrated in the US, the leaders of China, Russia, and India were not sitting idle. The three of them were at a summit in China.
The September wheat contract on the Matif closed yesterday at €4,50 lower, at €187 per tonne. This puts wheat on the Paris stock exchange below the lowest closing price of September last year, when the Matif closed at €188,75 just before the December contract transition. Wheat on the Paris stock exchange has thus fallen to its lowest level since March 2024. The Chicago stock exchange was closed yesterday for Labor Day.
The European stock markets had to make do with their own strength yesterday and therefore felt a bit rudderless according to some analysts. bearish News from Australia, where the wheat harvest is likely to be above the ten-year average, continued to resonate in Paris, and also in London, where wheat closed £1,25 lower at £168,30 per tonne (about €193,86 per tonne).
Millions in fines
There's more news from Australia. The Australian subsidiary of French financial services provider Societe General has been fined AUD$3,88 million (approximately €2,17 million) by the Australian regulator. Societe Generale Securities Australia, one of the largest players in the Australian futures market, allegedly allowed two clients to execute a total of 33 dubious transactions in the wheat and electricity markets. According to the regulator, Societe Generale should have recognized that these transactions were made with the intention of influencing the market.
Wheat prices in Russia are under pressure. The Ikar price for Russian wheat is $5 lower than last week, at $230 per tonne FOB (delivered on ship). Bigger news in Russia is the Shanghai Cooperation Organisation (SCO) summit in China. Chinese President Xi Xi, Indian President Modi, and Russian President Putin are all in attendance.
Tightening tires
After a border dispute between India and China in 2020, relations between the two superpowers cooled, but the two leaders met yesterday. Analysts say India's about-face is heavily influenced by US President Trump's trade policy. India's rapprochement with China, analysts say, is hampered by the 50% tariff imposed by the US on Indian products, partly because Trump is unhappy with India's import of Russian oil. Modi's participation in the summit appears to be primarily intended to emphasize India's sovereignty.
Putin has departed for China with a very different objective. The Kremlin primarily wants to strengthen ties with Beijing, according to several experts. This morning, Putin already spoke of ties at an "unprecedented level." The Chinese state news agency Xinhua reports that more than twenty partnerships have already been agreed upon between China and Russia, including in the field of agriculture. Both countries' economies are faltering, and it's not surprising that they are seeking rapprochement in an area like agriculture.