Analysis Grains
Wild strike makes soy market nervous
The grain market bounced across the board during the last trading session. The fear of the trade war subsided and gave way to concerns about the physical war in Ukraine. The weather reports provided additional support in the wheat market. The soybean trade was shocked by the wild strike in Argentina. Major processors around Rosario are therefore at a standstill, and if this lasts too long, the supply of soybean meal will be particularly affected.
The May contract for wheat on the Matif closed €2.75 higher at €226 per ton yesterday. Also, on the CBoT, grains showed recovery after the earlier decline this week. Wheat closed 1.6% higher at $5.47¼ per bushel. Corn increased by 1.1% to $4.53½ per bushel. Soybeans also posted gains and closed 0.9% higher at $9.96¾ per bushel.
The storm caused by Trump earlier this week with the imposition of tariffs on steel and aluminum, and the reaction from Canada and the EU, calmed down yesterday. Instead of the negative effects of the import duties on global trade, more attention was paid to the weather forecasts in the grain market. It is getting dry on the American prairies. For the southern half of the prairies in the states of Oklahoma, Kansas, and Texas, there will be no change in the next two weeks if the reports are correct. However, some precipitation is expected further north, and if it falls, it will arrive just in time for the spring wheat.
A strike in Argentina by workers in the soy processing industry is causing unrest in the soy market. The Argentine government had prohibited the strike at the company Vicentin (which operates various soy processing facilities). Not all workers complied, and wild strikes occurred at various production sites near Rosario. The Argentine government tried to end the strikes. According to the demonstrators, excessive force was used, and they refused to return to work yesterday. Argentina is a major player in soy processing, and a prolonged strike could have significant consequences for the availability of soybean meal and oil. A twenty-day strike in December 2020 is still fresh in the memory of various analysts. If the strikers reach an agreement quickly and resume work within a few days, there won't be much of an issue.
The timing of the strike is unfortunate for Argentine soybean farmers. The harvest has begun, and although the strike is pushing soy prices on the world market, it has a price-dampening effect in Argentina itself, as some analysts predict.
Conab provided an update on harvest forecasts for Brazil. The organization has increased the soy yield expectation by over 1 million tons to 167.4 million tons. The USDA had estimated 169 million tons earlier this week in the Wasde report. Conab has also raised the expected corn harvest by 800,000 tons to 122.8 million tons.
French wheat exports reduced
France is expected to export less wheat in the 2024/25 season than previously predicted, according to FranceAgriMer. The export this season is now estimated at 9.58 million tons, 1.7% less than the February forecast. The reduction is mainly due to less wheat going to countries outside the EU. The expected ending stock of wheat in France has been increased by 100,000 tons to 2.91 million tons.
Developments in Ukraine are being closely followed by players in the wheat market with above-average interest. The trade policy of US President Trump is difficult to follow, and the same goes for his foreign policy. After the dispute with Zelensky last week, Ukrainians and Americans seem to have found common ground in Saudi Arabia regarding a ceasefire. Now it is the Russians who are obstructing. Putin said yesterday that he is not opposed to a ceasefire, but that Russia is actually looking for a more definitive solution. Some interpreters hear in this that Putin wants to quickly gain some ground in Ukraine.
