Written Commentary
London Wheat Report
London wheat today eventually decided to wake up and track its European and US cousins downwards. All Paris wheat futures edged lower today, curbed by further strength in the EUR and weakness in Chicago. The EUR rose to a four-month high against the dollar, resulting in Western European grain being more expensive to overseas buyers. Regarding sentiment for US wheat contracts, it is evident that there are growing fears that U.S. tariffs will hurt economic growth, resulting in financial markets becoming unsettled. This growing uncomfortable viewpoint also appears to include grain investors worrying that U.S. grain exports could be hampered by retaliatory measures.
In South America, after an initial Brazilian soybean forecast made in August 2024 of 21.65 mmt, today local crop agency Emater reported that the final figure would be considerably less at 15.07 mmt at harvest. This drop was largely due to dry and hot weather seriously compromising the outlook in the Rio Grande do Sul state, one of the largest producing areas in the country. Brazil, the world’s largest soybean producer, is still expected to produce a record soy crop this season based on estimates from the national crop agency Conab. In addition, the state’s corn crop was estimated at 4.78 mmt, compared with 5.32 mmt in the initial forecast.
Finally, on the Chinese Zhengzhou Exchange today, it was reported that margin requirements for some rapeseed meal futures contracts were raised to 9% from 7% after Beijing’s 100% tariff on Canadian imports triggered a two-day rally that pushed prices to a five-month high. The new trading margin requirements will be effective from settlement tomorrow. This past Saturday saw China shock markets with a 100% tariff on just over USD 1 billion of Canadian rapeseed oil, oil cakes, and pea imports. All Matif rapeseed contracts have also been affected by this decision, trading down for a second day in a row today.
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