It's been quiet on news from the White House for a while. Trump changed that yesterday. A message from the US president about increased demand for soybeans from China caused quite a stir on the Chicago stock exchange. Corn and wheat were largely unaffected by the commotion, although Trump did mention other agricultural products.
The March wheat contract on the Matif closed yesterday up €0,50 at €193,75 per tonne. On the CBoT, wheat declined 2 cents to $5.26¾ per bushel. Corn closed 1 cent higher on the Chicago exchange, reaching $4.29½ per bushel. Soybeans jumped higher in the last trading session. The March soybean contract closed 2,5% higher, 26½ cents, at $10.92¼ per bushel.
US President Donald Trump caused quite a stir in the soybean market yesterday. On his own social media platform, Truth Social, Trump wrote that he had "an excellent phone conversation with President Xi of China." The big news in Trump's message for the grain market was China's additional imports of American soybeans. "China is considering purchasing additional agricultural products, including increasing soybean imports to 20 million tons for the current season (they have already committed to 25 million tons for next season!)."
The potential for increased demand from China had a significant impact on the CBoT. During the trading day, soybeans rose by almost $0,50. Some of this gain was retraced, but a 26-cent increase remains substantial. Some analysts believe this poses a risk. The positive mood on the Chicago stock exchange wasn't mirrored in Brazil. This makes US soybeans more expensive compared to South America. According to some experts, North America is pricing itself out of the market for non-Chinese destinations.
Some analysts also point out that a Trump announcement doesn't necessarily constitute a contract. Until there are signs that China is actually buying more soy from the US, we should proceed with caution. This is especially true because the soybean harvest is underway in Brazil, which is typically the period when prices are at their lowest.
Faintly
Corn and wheat couldn't really keep up with developments in the soybean market. The wheat market, in particular, is lacking news to support the market. In the US, concerns about frost damage have largely subsided. While Eastern Europe is still experiencing cold, minimum temperatures of minus 20 degrees Celsius are not expected in Ukraine for the time being. Consequently, the market estimates the risk of additional frost damage in winter grains to be somewhat lower.
In the US, ethanol production was lower last week than the previous week, falling to 281 million gallons compared to 327 million gallons. The cold snap that gripped the US that week played a role in the lower ethanol production, according to some analysts. However, the lower production has depleted ethanol stocks, which shrank to 25,1 million barrels. Last year, stocks this week were 26,4 million barrels.