An ample supply of wheat due to good harvests and limited demand on the global market remains the prevailing trend in the wheat market. Several countries are still issuing tenders for wheat, but according to some analysts, there are fewer of them than in previous years. Countries that are buying, like China, are also looking outside the usual channels.
The March wheat contract on the Matif closed yesterday down €1,25 at €187,75 per tonne. On the CBoT, wheat fell 8 cents to $5.20 per bushel. Corn also fell slightly in the last trading session, but its loss was limited to 1 cent at $4.39 per bushel. Soybeans closed down 5 cents at $10.71 per bushel.
Last Friday's Russian attack on two ports in Ukraine, which damaged three Turkish ships, has had little impact on grain prices. The report that Ukraine hit a Russian submarine with a naval drone also caused little commotion. Apparently, traders consider the war bounty incorporated into the wheat price high enough. Another explanation, according to some analysts, is that market players have a reasonable degree of confidence in the negotiations between Ukraine and Russia. Peace will not come immediately, but a ceasefire in the not-too-distant future is more likely, according to some analysts.
While demand for wheat has been higher at times, it's not as if nothing is happening. Yesterday, it was announced that the Chinese state-owned company Cofco had purchased a shipment of wheat. While this isn't unusual in itself, the country of origin is unusual for China. The wheat originated in Argentina, and China hasn't purchased wheat from this South American country since the 90s.
Thanks to a large harvest, Argentina has a substantial amount of wheat to sell, and exporters are offering the grain at competitive prices. Argentine President Javier Milei's last week lowered export tariffs on various agricultural products, including wheat, helping to strengthen its competitive position. For Argentine farmers, the wheat harvest isn't exactly a success story. "Although yields are high, the harvest shows lower protein content, which negatively impacts the price paid by international buyers," wrote the Rosario grain exchange.
Ally
According to experts, China's current choice of wheat from Argentina cannot be entirely separated from US President Donald Trump's trade policy. China wants to diversify its purchasing policy, and its decision (just before Trump took office) to open the door to imports from Argentina fits within this trend. It is somewhat ironic, however, that Trump's political ally, Mili, is benefiting from US trade policy, to a certain extent at the expense of North American farmers.
According to the USDA, China has purchased 132.000 tons of soybeans from the US. This did little to dampen the mood on the Chicago stock exchange. The record soybean harvest predicted for Brazil is keeping the market afloat. A harvest of 178 million tons is forecast for the 2025/26 season (4% larger than last season), primarily due to an expansion of the acreage. Exports are also expected to reach a record high, according to Bloomberg's forecast, at approximately 110 million tons. China is estimated to be Brazil's largest customer, accounting for approximately 85% of exports.