German cooperatives are somewhat more positive about grains

China would buy significant volumes of grain and soy in the US. That was the gist of Trump's message after his meeting with Xi. We are now more than a week later, and players in the grain market see little concrete evidence that China is actually buying large volumes. This has already been factored into the futures market prices. A more positive tone is coming from Germany. A favorable exchange rate of the euro could give European exports a boost, according to the German cooperative union DRV. The December contract for wheat on the Matif closed yesterday €2.25 lower at €192 per tonne. On the CBoT, wheat faced a harder hit, dropping 19¼ cents to $5.35½ per bushel. For corn, the decline was limited to 6½ cents, closing at $4.28¾ per bushel. Soybeans were the biggest loser on the exchange, dropping 28 cents to $10.91¾ per bushel. The lack of hard evidence that China is actually buying significant volumes of grain and soy in the US took hold of the market yesterday. China is active with purchases in the US, but it is not at the pace that the market has priced in over the past weeks around the peak between Trump and Xi. It has been confirmed that China has bought two shipments of wheat totaling 120,000 metric tons from America, but little is visible from the 12 million tons of soy that Trump claimed would be purchased by Beijing this year. High expectationsDue to the rally of especially soy that started in early October, soy from the US has become too expensive on the world market, so several analysts claim. For delivery in December and January, the price for soy delivered on the ship in the US is slightly above the price from Brazil. This is still before the tariff that Chinese importers must pay on soy from the US. After the talks with Trump, Beijing has lowered the tariff on American soy but has not completely eliminated it. In February, the first soy from the new harvest will become available in Brazil. Typically, the price then also drops, and the gap with soy from the US can become even larger. China does not necessarily need to buy soy. Throughout the first ten months of this year, China imported 95.7 million tonnes of soy compared to 89.9 million tonnes during the same period last year. Brazil is by far the main supplier of soy to China. The growing season in Brazil, however, is not going quite as growers would like. Planting could begin early, but there is a lack of sufficient moisture to properly get the crop started and allow it to grow. As a result, part of the soy has been replanted. A little further south, in Argentina, farmers have begun planting soy, writes the grain exchange of Buenos Aires. The exchange reports optimal conditions after the recent rain. The exchange predicts a soy harvest of 48.5 million tonnes in Argentina. Despite drought, corn in Germany is not too badFor a somewhat more positive view on the grain market, we should consult our eastern neighbors. The German cooperative union DRV estimates the corn harvest in Germany at 4.7 million tonnes. Thus, the harvest is 3.5% lower than last year but still close to the long-term average. At the beginning of the season, corn was affected by drought in many places in Germany, but despite this, the yields are not disappointing. The total grain harvest in Germany is estimated by the DRV at 45.6 million tonnes. This is the largest harvest since 2017. The trade deal between China and the US creates positive momentum in the international market, writes Guido Seedler, market expert on grains from DRV, in the commentary on the figures. However, we should not overestimate concrete demand from that direction. According to Seedler, the stronger dollar presents a greater opportunity for European grain exports. The export of grain, mainly wheat, from the EU to third countries has been slow in recent months. The relatively expensive euro has played a role in this. Now that the dollar is rising, European wheat is becoming more competitive again, and demand from countries outside the EU may increase. “This would lead to an easing of the internal market and better prices for farmers,” says Seedler.