Analysis Grains
Wheat from weak brother to biggest gainer
There is a lot to say about Donald Trump, but boring is definitely not one of them. Now that it is clear that import duties will not be introduced immediately, there was a sigh of relief in the American market. Outside America, there was also plenty going on. Egypt is in the market for wheat and critical voices are being heard about European export figures. In South America, the weather is providing support for soybeans.
The March contract for wheat on the Matif closed yesterday €4.75 higher at €231.25 per ton. Wheat on the CBoT also took a big step and closed 3.7% higher at $5.58¾ per bushel. Soybeans followed wheat fairly closely with an increase of 3.2% to $10.67¼ per bushel. Corn also closed in the green, but with a 1.2% increase to $4.90 per bushel, the rise in corn was slightly more limited.
The fact that Trump did not introduce import duties on his first day in the White House but instead wants to review existing trade agreements gave the grain market support on the first trading session after a long weekend in the US. Wheat received additional support as Trump brings back the 'Phase 1 trade agreement' from January 2020. In that agreement, China agreed to import an additional $200 billion worth of goods and services from the US over a period of two years. China was also supposed to remove barriers for exports including meat, dairy, animal feed, and biotechnology. China did not adhere to the agreements and imported 57% of the promised $200 billion. After ratifying the agreement, China imported 9 million tons of wheat from the US in the 2020/21 season. That was the largest import in 25 years.
Cold weather in the US and a lack of snow in the southern prairies has almost certainly caused damage to winter wheat, according to local sources. Temperatures dropped to minus 20 degrees Celsius in southern Kansas and parts of Oklahoma. The extent of the damage will become clear later. It will take a few weeks to determine if the wheat will ultimately fail.
Egypt in the market for wheat
Another bullish news for the wheat market came from Egypt. The Egyptian state procurement company Mostakbal Misr (the successor of Gasc) has reportedly bought a significant volume of Russian wheat for delivery in January and February, according to various sources. Precise details regarding volume and price have not been disclosed. Ships are on their way to the port of Novorossiejsk with a total capacity of over 250,000 tons. Not all of it will go to Egypt, but it does indicate that Egypt has not placed a small order according to some analysts.
Until January 19, the EU has exported 11.74 million tons of wheat this season. That is 37% less compared to the same period last season. Criticism of European export figures is growing. Since the 2023/24 export season, the export figures of Bulgaria and Ireland have been missing from the European Commission's overview. Since the beginning of 2024, the figures for France are not complete and for seven weeks, the figures for Italy have also been incomplete. Complete export figures do not seem to be a priority in Brussels.
Weather issues in South America
Soybeans received support from reports from South America. In recent days, there has been insufficient rain in the important agricultural regions of Argentina. This was stated by the Rosario grain exchange after analysts had already lowered yield forecasts due to the warm and dry weather. In Brazil, rain is causing problems with the soybean harvest. According to Agrural, 1.7% of the soybean area has been harvested compared to 6% at the same time last year. The harvested area is the smallest since 2021. Harvest delays are occurring, especially in the important soy state of Mato Grosso. The rain is also not conducive to the quality of the soybeans.
With the slow pace of the soybean harvest, the planting of corn as a second crop is also delayed. According to AgRural, 0.3% of the second crop corn area has been planted. Last year, 4.9% of corn had been planted. The harvest of the first crop corn has progressed to 4.1% compared to 7.9% last season.
Jurphaas Lugtenburg
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