Military show of strength makes grain market nervous

Ukraine borders the EU, but the peace talks with Russia have more effect on the American grain market than ours when looking at yesterday's closing prices. China's military exercise around Taiwan is also drawing attention. The relationship between China and the US was already strained, and these actions from China are not improving it. American soybean traders will especially notice this. The March wheat contract on the Matif closed yesterday €0.50 higher at €190.50 per ton. On the CBoT, the grains took a step back. Wheat closed 6 cents lower at $5.13 per bushel. Corn lost 7¾ cents to $4.42¼ per bushel. Soybeans were the biggest loser, down 9¼ cents to $10.49½ per bushel. The peace talks between Ukraine and Russia have a different impact on the European and American grain markets. Last weekend, Zelenski visited Trump, and American traders saw positive signals. Yesterday morning, Trump had a phone call with Putin. According to various analysts, little came from that. Russia accused Ukraine of attacking one of Putin's dachas. Trump expressed his disgust about that. Ukraine dismisses the Kremlin's statements as Russian propaganda. Meanwhile, Russian grain exports are not going smoothly. SovEcon expects Russia to export 4.2 million tons of wheat in December, down from 4.8 million tons a month earlier. The price for Russian wheat is also under some pressure. Market agency Ikar lowered its quotation by $1 to $226 per ton. In Europe, the market seems less influenced by developments in the Black Sea region. However, that does not mean there is a lot of room at the top. There have been significant wheat stocks hanging over the market, and with good harvests in Australia and Argentina, the situation for sellers is not improving. Tensions between China and Taiwan are escalating due to a large military exercise by China around Taiwan. According to experts, China wants to demonstrate with the exercise that it is capable of blocking Taiwan's strategic port cities. The sale of weapons by the US to Taiwan is a thorn in the side of Beijing. The already quite frosty relationship between China and the US is certainly not benefiting from this. China is using soybeans somewhat as a pressure tool against the US. Large volumes of soybeans from the US went to China more since the trade war, but that volume is now significantly behind. Yesterday, the USDA announced a sale of 100,000 tons of soybeans. The buyer was Egypt. China is remaining quiet in the American market. Instead of the US, China prefers soybeans from South America. The Brazilian harvest looks promising. It is currently on the dry side in important soybean-growing areas in Brazil, but rain is forecasted for next week. Some analysts are more concerned about the expected soybean yields in Argentina. It is dry in the southern part of the country, and according to weather forecasters, no changes are expected in the short term.