After a volatile start, US wheat prices staged a marked recovery towards the end of the week, driven by speculation about Chinese buying interest. Prior to this, SRW and HRW wheat had initially fallen to new multi-year lows on the CBoT before rallying strongly from Wednesday. On Friday, SRW wheat closed well up, while HRW recorded its highest daily gain of the week at 11.5 US cents. Market rumors that China was interested in US wheat - fueled by the planned top-level meeting between Trump and Xi Jinping - provided a boost. However, there were no official confirmations due to the ongoing government shutdown in the US. Support also came from a significantly larger than expected wheat purchase by Algeria, which triggered global speculation about further import activities. The frosty weather forecasts for Argentina and sowing problems in China also came under increased scrutiny. The reaction on Euronext remained muted. Despite interim gains, the December contract was unable to make a sustained move. After the Algerian tender, France remains without a surcharge, but is hoping for new sales opportunities towards Asia.
The corn markets were robust for long stretches. In Chicago, the price trend benefited from strong demand for ethanol and rising export figures. Although the government shutdown caused uncertainty, it did not put a lasting damper on the buying mood. In addition, many US farmers remain reluctant to sell and continue to hold back their stocks in view of low prices. Towards the end of the week, the new package of sanctions against Russia also pushed up corn prices. On Euronext, however, prices remained in a narrow sideways corridor.
ZMP Live Expert Opinion
The wheat market picked up surprisingly towards the end of the week, but many factors continue to suggest a fragile upward trend. Whether Chinese interest in US wheat will be confirmed remains unclear in the absence of official data. Fundamental pressures such as large inventories and strong harvests are still present. Corn prices are being supported by the low level of sales activity among farmers and the positive trend in ethanol and exports. Nevertheless, the upside potential remains limited as the current US harvest is heading for a record level. Overall, nervous sideways trading is expected for both markets in the short term, although geopolitical impulses could provide some movement.
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