South America in the spotlight on the grain market

Ursula von der Leyen's trip to South America for the signing of the Mercosur free trade agreement may be postponed by a month. The Italian prime minister wants more time to convince the agricultural sector of the benefits and necessity of the deal. Various players within the European agricultural sector (not only in Italy) fear unfair competition from South America. In Argentina, farmers are busy getting soy into the ground. The March contract for wheat on the Matif closed marginally higher by €0.75 to €186 per tonne. At the CBoT, wheat also closed in the green with a gain of 1½ cents to $5.07¾ per bushel. Corn had a stronger increase, rising by 4 cents to $4.44½ per bushel. In contrast to the grains, soybeans dropped slightly and closed 6 cents lower at $10.52¼ per bushel. The Mercosur deal between the EU and Argentina, Brazil, Paraguay, and Uruguay has been postponed by a month. The intention was for the president of the European Commission Ursula von der Leyen to travel to South America on Saturday to finalize the free trade agreement between the EU and the four South American countries after 25 years of negotiations. The Mercosur agreement is causing considerable unrest in the European agricultural sector. Farmers in Europe fear unfair competition from Latin America. The request for postponement comes from Italian Prime Minister Meloni, but also France, Poland, and Hungary have expressed critical views about the deal. France wants stricter guarantees, including clauses ensuring that Mercosur products comply with EU rules on the use of pesticides and chlorine, as well as stricter food safety inspections. It is unacceptable if vegetables, beef, and chicken that have been treated with chemicals banned in France arrive on our territory, said French government spokesman Maud Bregeon during a press conference. Proponents of the agreement assert that it will not abolish existing EU regulations on food safety. Inspections To address concerns, the European Council and the European Parliament have determined that if the import volume rises by more than 8% or the price of a product drops by more than 8% in one or more EU member states compared to the three-year average, it will be investigated. The Council and Parliament have also committed to taking measures to conduct inspections (also in Mercosur countries) to reassure farmer groups who insist that production standards, such as those for pesticides and animal health applicable in Europe, are adhered to. The Mercosur agreement was one of the reasons for the massive farmer protests in Brussels yesterday. In South America, farmers seem more focused on the progress of the current growing season. Rain is forecast for northern Argentina and southern and central Brazil. This is good news for soy and corn in the area. If it remains wet the rest of this month, local waterlogging may occur in some Brazilian provinces, some sources warn. In southern Argentina, after a wet and warm November, it is now on the dry side. According to the Argentine Ministry of Agriculture, 58% of the planned soybean area has been sown. Last year at this time, the figure was at 66%. Argentine farmers generally aim to finish planting soybeans in December. When soy is sown as a follow-up crop after wheat, it can sometimes be delayed until early January. No snow Drought combined with relatively mild weather is becoming a problem in the southern prairies of the US. A protective snow cover is lacking on the winter wheat there, and if it gets colder in January, winter kill is looming, warns LSEG. In the latest drought monitor from the USDA, we see that drought is expanding especially in Oklahoma.