China hunts for bargains in the wheat market

A ample supply of wheat due to good harvests and limited demand in the global market, that remains the story on the wheat market. Several countries are still issuing tenders for wheat, but there are fewer than in previous years according to some analysts. Countries that do buy, such as China, are also looking outside the established channels. The March contract for wheat on the Matif closed yesterday at €1.25 lower at €187.75 per tonne. On the CBoT, wheat lost 8½ cents to $5.20¾ per bushel. Corn also lost a bit in the last trading session, but here the loss was limited to 1 cent at $4.39¾ per bushel. Soybeans closed 5 cents lower at $10.71¾ per bushel. The Russian attack last Friday on two ports in Ukraine, which damaged three Turkish ships, had little impact on grain prices. Also, the news that Ukraine hit a Russian submarine with a sea drone caused little commotion. Apparently, traders find the war premium priced into the wheat price high enough. According to some analysts, another explanation is that market players have quite a bit of confidence in negotiations between Ukraine and Russia. Peace will not come immediately, but a ceasefire in the not-too-distant future is seen as more likely by some analysts. Although the demand for wheat has sometimes been greater, it is not the case that nothing happens. Yesterday, it was announced that the Chinese state-owned company Cofco has purchased a shipload of wheat. That is not particularly remarkable, but the country of origin is indeed special for China. It concerns wheat from Argentina, and China has not purchased wheat from this South American country since the 1990s. Due to a large harvest, Argentina has quite a bit of wheat to sell, and exporters are offering the grain at sharp prices. The fact that Argentine President Javier Milei lowered the export tariffs for various agricultural products including wheat last week helps to strengthen the competitive position. For the Argentine farmer, the wheat harvest is not only a success story. Although the yields are high, the harvest shows a lower protein content, which has a negative impact on the price that international buyers pay, wrote the Rosario grain exchange. Ally That China is now choosing wheat from Argentina can, according to experts, not be separated from the trade policy of American President Donald Trump. China wants to diversify more in its procurement policy, and the fact that it (shortly before Trump took office) opened the door for imports from Argentina fits into that trend. It is somewhat ironic that Trump's political ally and partner Milei is benefiting from US trade policy at the expense of North American farmers in a way. According to the USDA, China has purchased 132,000 tonnes of soybeans from the US. This did not really change the sentiment on the Chicago market. The record soybean harvest forecast for Brazil keeps a lid on the market. For the 2025/26 season, a harvest of 178 million tonnes is expected (4% larger than last season) mainly due to an expansion in acreage. According to Bloomberg's forecast, exports also reach a record of approximately 110 million tonnes. China is estimated to be Brazil's largest customer, accounting for about 85% of exports.