Analysis Grains
Trump is retracting a bit after all
With Trump, you never know where you stand. In the first round of the trade war, the US is gradually pulling back a bit. For the American grain trade, this is not bad at all. Prices on the CBoT are bouncing back after the hard hits earlier this week. Furthermore, it's the weather forecasts that are causing some excitement. In the US, they are more concerned about this than in Europe.
The March contract for wheat on the Matif closed €4.25 lower at €211 per ton yesterday. The May contract, which sees the most trading activity, closed €0.25 lower at €222.75 per ton. The mood on the Chicago exchange was much more positive. Wheat closed 1.2% higher at $5.37 per bushel. Corn was even stronger in the positive territory with a 2.1% increase to $4.49½ per bushel. Soybeans neatly positioned between the grains and rose by 1.6% to $10.14 per bushel.
It's so impactful, but otherwise you could almost call Donald Trump's policies a farce by now. The import tariffs that were announced with much fanfare and implemented earlier this week seem to be weakening by the day. Earlier this week, it was the top executives of the major American car manufacturers who convinced the president to make an exception for their industry to limit the damage to the ordinary American citizen. Yesterday, a phone call from Mexican President Claudia Steinbaum was enough to change Trump's mind. For all goods under the USMCA (the successor to Nafta), the 25% import duty is postponed by a month until April 2.
It's difficult to assess what Trump will disrupt or not, but some analysts cautiously assume that the trade war may not be as severe as it seems. It's too much to say that it will all end smoothly, but traders are breathing a sigh of relief, especially for corn and soybeans (which see significant volumes going to Mexico).
Drought in the American wheat belt remains a problem. The drought monitor shows that the northern prairies remain dry. And if the weather forecasts are correct, the dry weather will continue for a while. Analysts are not immediately concerned about the colored parts of the corn belt. Rain is on the way to the area, and, importantly, it will still be a while before corn and soybeans need to be planted.
In Europe, there is some concern about the condition of winter wheat to a certain extent, but the Matif seems immune to this, almost. In northern France, the wheat is only moderate after a wet winter. Further east in Romania, Bulgaria, and the Balkans, drought has taken its toll. On the other hand, in countries like Germany and Poland, winter wheat is relatively healthy. From that perspective, it's not surprising that the Matif remains fairly stable.
