Speculators turn to the grain market

The rally in the soybean market continued in the last trading session. For now, the facts matter less. Market players want to believe that China will buy additional US soybeans. In the US, wheat and corn were lifted by the optimism surrounding soybeans. European wheat did not participate. A solid outlook for Russia’s wheat crop kept sentiment in check. The March contract for wheat on the Matif closed yesterday €0.25 lower at €193.50 per tonne. On the CBoT, wheat was on the rise with an increase of 8½ cents to $5.35¼ per bushel. Corn closed 5½ cents higher at $4.35 per bushel. The biggest gainer on the Chicago exchange was soybeans. For the second day in a row, soybeans made a significant leap upward in the last trading session with an increase of 20 cents to $11.12¼ per bushel. The rally in the soybean market that US President Trump unleashed on Wednesday after his message about extra demand from China continued yesterday. Whether China will actually buy an additional 8 million tonnes of soybeans in the US this season doesn't really matter to the market anymore. Market participants want to believe it, as some analysts suggest. Political wishful thinking and economic reality are somewhat intertwined here. It is quite plausible that Beijing is trying to keep the US president in a good mood to prevent a renewed battle in the trade war. However, China is known for acting pragmatically and decisively when it comes to securing raw materials. Paying a premium for soybeans from the US while Brazilian soybeans from the new harvest are coming to market doesn't sound logical for Chinese trade policy. Based on data from LSEG for soybeans, there is about $28 per tonne difference between soybeans loaded in the Gulf of Mexico or loaded in Brazil. This means that for a volume of 8 million tonnes, it amounts to over $220 million that US soybeans are more expensive than soybeans from Brazil. Russian wheat thriving through the winterThe good mood in soybeans on the CBoT yesterday lifted corn and wheat as well, unlike on Wednesday when grains barely reacted to the soybean rally. In Europe, the wheat market was somewhat hesitant. A report from Russia stated that the frost damage in winter crops is not as serious as feared. This was reported by Russian Deputy Prime Minister Dmitry Patrushev. About 20 million hectares of winter crops have already been sown for this year's harvest. Experts estimate that 97% of the crops are currently in good condition. This is a very good result: on the same date last year, it was 87%. According to Patrushev, the grain harvest of 2025 is the third largest ever in Russia with 142 million tonnes, of which 92 million tonnes is wheat. According to preliminary data, crop production has increased by 9%. This was the main factor in positive production development in agriculture. The plans for our main crops have been realized, various Russian media quote Patrushev. The figures from Patrushev do not completely match the figures from the Russian statistics agency Rosstat. According to some sources, this is due to differences regarding which occupied areas in Ukraine have been included. The USDA also estimated a total harvest of 89.5 million tonnes in the January WASDE report.