Sanctions against Russia boost grain market

America has once again caused quite a stir in the grain market. New sanctions announced by Trump against two Russian oil companies also impacted the grain market. The record wheat harvest predicted by the IGC could not dampen the mood. And then there are also rumors that China has purchased 1 million tons of soybeans in the US. The December contract for wheat on the Matif remained unchanged yesterday at €189.75 per ton. On the CBoT, wheat made a significant leap upward, closing 9¼ cents higher at $5.13 per bushel. Corn was also in the green, with a rise of 5 cents to $4.28 per bushel. Like the grains, soybeans also recorded higher prices, rising 10 cents to $10.44¾ per bushel. US President Trump announced new sanctions yesterday against the Russian companies Rosneft and Lukoil. These are two major players in the oil market. Due to the sanctions, refineries in China and India will likely need to seek other suppliers. If they continue to do business with the Russian companies, they risk being excluded from the international banking system. The big question is whether these refineries dare to take that risk or if they expect Trump to really take a tough stance now. The effect of the increase after this news on the oil market also spilled over into the grains, according to analysts. This is partly because it is expected that international trade flows will be disrupted, and a higher oil price is favorable for biofuel production. What the sanctions also clearly indicate is that Trump’s patience with Putin is running out. Trump sees himself as the great dealmaker. After his adventure in the Middle East, he now also wants to force a breakthrough in the war between Ukraine and Russia. However, Putin has different ideas about this. More rain on the way The weather is another factor that contributes to a somewhat more positive mood. The storm predicted yesterday turned out to be milder, but more rain is expected according to reports. Planting of winter wheat will see little activity next week in Europe if the weather forecasters are correct. Market players attributed little value to the forecast from the International Grains Council (IGC), we can conclude. The harvest forecast for wheat was raised by 8 million tons to 827 million tons. The harvest is expected to be 1.1% higher than last season and reaches a record size. Among other things, the IGC estimates higher yields for Russia, the US, and Argentina. Is China back in the market? Rumors are circulating in the soybean market that China has purchased 1 million tons of soybeans in the US. Various analysts doubt the reliability of the rumor. Whether it is true can hardly be verified in the short term. Normally, such transactions are verified through the USDA. However, due to the shutdown of the US government, this department of the US Department of Agriculture is closed. Producers in the US, however, are in no hurry to sell soybeans. Farmers are taking the gamble that a deal will be made between China and the US and that prices will improve as a result, or that America may introduce an additional support program. Also playing a role is that producers expect that soybean prices cannot drop much further. The volatility in the soybean market is expected to not decrease, experts predict. China and the US are still in talks over the conditions for mutual trade. Next week, Trump and Xi will meet for this purpose in South Korea. Russia and Ukraine will, partly due to the new US sanctions, also be a topic of discussion, analysts expect. Trump wants to project confidence that a deal will be reached, but the more topics arise, the greater the chance that they won’t be able to come to an agreement, some sources say.