American armada looms over grain markets

Weather extremes partly determine the mood in the grain markets. The cold in the US had already been largely priced in. Now it is the extreme cold in Ukraine and Russia that is worrying analysts. On the other side of the world, in South America, it is not 30 degrees below but over 30 degrees above zero, causing heat stress in the crops. Geopolitical developments, specifically Trump's 'armada' heading to Iran, are mainly affecting oil. Some see this as a potential indicator for developments in the grain markets. The March contract for wheat on the Matif closed yesterday €1.25 higher at €191.25 per tonne. On the CBoT, wheat also rose slightly by 5½ cents to $5.41½ per bushel. Corn moved more sideways and rose by ¾ cent to $4.30¾ per bushel. Soybeans gave back slightly, closing 2¾ cents lower at $10.72¼ per bushel. Cold weather provides some support in the wheat market. In the US, snowstorms and extreme cold began last weekend. From this weekend, it will get cold again in parts of Europe. In the EU, it is the Baltic states, Scandinavia, and Poland where severe frost is predicted. Further east, in Belarus, Russia, and Ukraine, it is expected to get even colder according to weather models. 30 degrees frost In Ukraine, the mercury can drop to 30 degrees below zero. We consider the current cold spell extremely dangerous for winter crops in a significant part of Ukraine, wrote market agency Barva Invest on Telegram. The combination of very low temperatures and little or no snow makes winter grains and winter rapeseed susceptible to winter kill. The lowest temperatures are predicted in the north and east of Ukraine, but there is some snow according to some local sources. In the south of Ukraine, it will be less cold, but as there is no snow there, the winter grains are by no means safe. In South America, it is not the cold but the heat that causes problems. In the north of Argentina and Paraguay, temperatures are 2 to 5 degrees Celsius above what is normal. Also, in the south of Brazil, it is very warm with temperatures well above 30 degrees. Rain is forecasted for the Argentine pampas in the coming two weeks. This is favorable for the growth of corn and soybeans. In central Brazil, it is expected to be wetter than usual according to weather models. This is favorable for the second crop, but for the soybeans—which are about ripe there—some local sources suggest it is better to stay dry. The tensions between Iran and the US have only limited impact on the grain markets. The unrest was evident in the price of oil. Brent crude oil rose to $69.59 per barrel, the highest level since last August. US President Trump spoke earlier this week about a 'gigantic armada' heading to Iran. A rising oil price can often be an indicator of what happens to grain prices.