Analysis Grains
Russia already cutting wheat export quotas
The sentiment in the wheat market was somewhat subdued, despite news that Russia is tightening export quotas even before they come into effect. German farmers have meanwhile sown significantly more winter wheat compared to a year earlier. Players in soybeans are mainly focused on what is happening in China. State buyer Sinograin shows a preference for soybeans from the US.
The March wheat contract on the Matif took a step back last Friday, down €2 to €227 per ton. Wheat remained unchanged on the CBoT at $5.53 per bushel. Corn rose by 1.3% and closed at $4.46¼ per bushel. Soybeans lagged slightly behind corn, closing 1.2% higher at $9.76½ per bushel.
The sentiment remains subdued in the wheat market, despite there being reasons for optimism. Russia announced a reduction in the export quota for the period from February to June, from 11 to 10.6 million tons. By allowing less wheat exports, the Kremlin hopes to control prices in the domestic market.
Russia is struggling with high inflation. The official inflation rate for November was 8.9%. In October, the Russian Central Bank raised the interest rate by 200 basis points to 21%. In the meeting last Friday, it was decided not to further increase the interest rate.
More acreage in Germany
Due to relatively favorable weather last autumn, German farmers were able to sow more winter grains. According to preliminary figures from Destatis, the German Federal Statistical Office, the winter grain area increased by 5.6% compared to the previous season, reaching 4.8 million hectares. The largest increase is seen in winter wheat. With 2.8 million hectares, there is a 12% increase in winter wheat compared to last year.
This increase was not unexpected. Last autumn was extremely wet, and farmers did not have the opportunity to sow wheat. According to Destatis' preliminary figures, the rapeseed area is 2.3% larger, totaling 1.1 million hectares. The growth in wheat acreage in Germany is slightly higher than in France. According to the French Ministry of Agriculture, French farmers sowed 9% more wheat compared to a year earlier.
Demand for American soybeans
China is sending some interesting signals for the soybean market. In November, China imported 25% less soybeans from Brazil compared to the same month a year earlier, according to Chinese customs data. However, more soybeans were imported from the US; 2.79 million tons compared to 2.29 million tons last year. Importers may be anticipating potential trade barriers when Trump takes office. In total, China imported 97.1 million tons of soybeans in the calendar year 2024, putting the country on track for a record import.
Another noteworthy piece of news is that the Chinese state buyer Sinograin has purchased 500,000 tons of soybeans from the US for delivery in March and April. Sinograin prefers (according to insiders) soybeans from the US over those from Brazil, citing quality reasons. Sinograin plays a role akin to a stock manager in China. Storability is a key factor for the state-owned company, which explains why Sinograin pays about $1 more per bushel for soybeans from the US compared to those from Brazil.
