Fundamentally, not much has changed, but the mood in the US wheat market seems to have taken a 180-degree turn. Instead of searching for a new bottom, they're looking upwards again. In Europe, traders are clearly more cautious. News from South America, for a change, was also more positive for the grain market.
The March wheat contract on the Matif closed yesterday up €1,75 at €192,25 per tonne. Wheat activity on the CBoT was more pronounced. The March contract in Chicago closed 15¼ cents higher at $5.52½ per bushel. Corn was also in the green, rising 3¾ cents to $4.31¼ per bushel. Soybeans closed 13¼ cents higher at $11.37¼ per bushel.
Market sentiment remains difficult to interpret. Fundamentally, the wheat market hasn't changed much over the past two days, yet wheat rose to a three-month high on the Chicago futures market. Analysts attribute this in part to robust US exports. According to the latest USDA figures, a total of 501.900 tons of wheat crossed the border in the week ending February 5th. This is at the high end of what traders had anticipated.
The winter cold in southern Russia is also cited as a reason for the shift in the wheat market. The extent of the frost damage to wheat is still difficult to determine. However, according to various sources, it seems almost certain that not all wheat survived the frost, and especially the formation of ice in the fields (because little or no snow fell). This doesn't fully explain what's happening in the wheat market. "The wheat market has been so pessimistic for so long that something like this was inevitable," says Jack Scoville, analyst at The Price Futures Group on Reuters.
In the US, the wheat market is somewhat more positive, but in Europe, there's somewhat less enthusiasm. European exporters are partly disadvantaged by the relatively strong euro. Competition from exporters in the Black Sea region isn't helping matters either, although exports there are also struggling. Earlier this week, reports emerged from Ukraine that orders cannot be filled because terminals are down due to Russian attacks on the Ukrainian power grid. Russian seaborne wheat exports in January were down almost 13% compared to January 2025.
The Brazilian government agency Conab released a new harvest forecast for Brazil yesterday. Conab lowered the expected wheat harvest by 1 million tons to 6,9 million tons. Corn was reduced by 500.000 tons to 138 million tons. Brazil's largest crop is soybeans, and the harvest estimate for that crop was raised by almost 2 million tons to 178 million tons. This still leaves Conab below the USDA's forecast for a Brazilian soybean harvest of 180 million tons.
China and the US are working towards a ceasefire in their trade war, the South China Morning Post reports. Under the current trade agreement, the US imposes a 10% import tariff on all fentanyl-related products. In response, the soybean industry has imposed a 10% tariff on soybeans from the US. In the lead-up to Trump's visit to Xi Xi in Beijing, scheduled for April, both countries are reportedly working on a new trade deal. With a 10% tariff on soybeans, analysts say it's unlikely China will import an additional 8 million tons of soybeans from the US this season, and 25 million tons in the coming season, according to several experts.