Source: Ukragroconsult (Ukraine)
Wheat hit its highest in almost 3 months as traders took into account China’s cautious approach to US tariffs and the market awaited details of possible talks between the leaders of the world’s two largest economies, UkrAgroConsult reported citing Bloomberg.
This comes at a time when a new “trade war” is simmering between Washington and Beijing, expectations of which have stirred grain markets over the past week. But China’s corresponding tariffs, announced Feb. 4 in response to U.S. tariff policy, are seen as measured and a sign that Beijing is trying to avoid the worst-case scenario of a major escalation.
US duties may not reach the 60% level that Trump threatened during the election campaign.
Grains, including wheat, rose in price after Beijing imposed duties on U.S. energy and farm equipment, but left crops off the table, only minutes after Trump’s 10% levy on Chinese goods went into effect, cutting some initial losses. On Feb. 3, Trump said he expected to talk to China “within 24 hours,” but then hinted that talks could be delayed.
Concerns continue that trade tensions between China and the U.S. could affect agricultural products such as soybeans. In China, soybean meal prices rose on Feb. 5, the first day the market opened after the Lunar New Year holiday.
“Although agricultural products are not affected by Beijing’s countermeasures, the market is still highly concerned about the uncertainty of future Sino-US relations,” said Shanghai JC Intelligence Co. Ltd.
Rising soybean meal prices followed gains on the Chicago Board of Trade, while weather problems in South America affected quality in some regions and supported global soybean prices.
China is the world’s largest importer of soybeans and a major buyer of corn and wheat. U.S. duties could reduce demand for those crops, threatening exports by $10 billion or more.
The most-active soybean meal prices on the Dalian Commodity Exchange rose 3.2%, the highest daily jump in 3 months. Soybean oil futures on the Dalian Commodity Exchange rose 2.7%, while the price of palm oil rose 2.1%. China’s corn rose 1.1%.
A one-month delay in Trump’s imposition of 25% tariffs on Canada and Mexico added relief to grain markets. A weaker dollar is also improving the competitiveness of U.S. grains, according to CRM Agri.