Trump's summit in China supports the grain market

Geopolitical tensions are supporting grain markets. The conflict with Iran is one factor, while Trump is visiting China this week. Ahead of the summit, Beijing could buy additional US soybeans to appease the American president, according to some analysts. Weather conditions are also lending support to the US wheat market. The May contract for wheat on the Matif closed yesterday on the last day it could be traded at €180 per tonne. The September contract recorded a gain of €2.50 to €208.25 per tonne. On the CBoT, the July wheat contract closed 15 cents higher at $6.34 per bushel. Corn also closed in the green, but with 4 cents the rise was somewhat more limited than in wheat. Corn thus closed at $4.75¼ per bushel. The July soybean contract closed 5 cents higher on the Chicago exchange at $12.13 per bushel. Geopolitical developments continue to play a major role in the grain market. This coming Thursday and Friday, US President Donald Trump will be in China, where he will meet with Xi Jinping. Agriculture and trade will be high on the agenda for the world leaders. Some analysts expect China to buy some extra soybeans in the US before or during the summit as a sign of goodwill. Trump is insisting that China should buy more products from the US. Strengthening US exports was the main reason for the import tariffs that Trump introduced more than a year ago in his own unique way. Power politics Whether Trump will succeed in getting China to buy larger volumes of agricultural products from the US remains to be seen, according to various analysts. China’s negotiating position has not become weaker in recent months. That cannot be said of the Americans. Trump’s import tariffs have partly been declared unlawful by a US judge and the war in Iran and its consequences at the American gas pump are creating a dynamic that is not directly favorable to Trump. The rejection of the Iranian peace plan by the US pushed oil prices higher in the previous trading session. In the wake of the oil market, wheat and corn also moved up. Another factor supporting the grain market is the weather in the US. Drought remains and continues to be a major concern in the southern US and on the prairies. This week, 28% of the winter wheat in the US receives a good or excellent rating in the new Crop Progress report. Last week that was still 31%. In terms of growth, winter wheat is ahead. 61% of the acreage is already in the ear, compared with 51% last year at this time and 45% on average over five years. A catch-up has been made with the sowing of spring wheat. Of the planned acreage, 53% is now in the ground, compared with 51% on average over five years. Last year at this time, 63% of the spring wheat had been sown. Barley sowing has progressed further, with 65% sown. The five-year average for barley stands at 58% and last year at this time 61% of the planned acreage had been sown. Corn is being sown quickly US farmers are well over halfway with the sowing of corn. From 38% sown in the week ending May 3, this rose to 57% a week later. The five-year average for this week stands at 52% sown. The rain that fell last week in parts of the cornbelt did not cause major delays in sowing corn, we can conclude. Of the corn sown, 23% is now above ground. In Texas, corn is furthest along, with 75% above ground. In the northern states North Dakota and Michigan, where sowing of corn has just begun, nothing is above ground yet. Of the planned soybean acreage in the US, 49% is in the ground. This means soybean sowing is ahead of both the five-year average and last year, when 36% and 45% had been sown respectively. One fifth of the soybeans are above ground, the USDA writes in the Crop Progress report. This evening Dutch time, the USDA will release the Wasde report. According to some experts, speculators were therefore a little cautious and slightly smaller volumes were traded on the futures market in the previous trading session.