Tariffs on US exports could significantly reduce internal US grain prices to make it competitive internationally.
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Global futures markets weakened further last week, but they had recovered slightly from their lowest points by last weekend. All markets fell – wheat, maize and soya beans – but the latter has possibly suffered the greatest fall. It is my guess that the slight recovery ahead of last weekend was a balancing act following the overreaction that the market makes in either direction.
Politics continue to be the dominant influence in market sentiment. US tariffs are centre stage, along with retaliatory reactions of other countries. It seems likely that such reactions will be a major factor in the near-term, but it also seems inevitable that trade direction will rebalance and that market fundamentals will once again drive market decisions.
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In the short term, markets are trying to unravel the consequences of the EU imposition of a 25% tariff on US maize.
While there is acknowledgement that wheat will be scarce, it is caught in the political turmoil affecting all grain prices. It will recover, but whether that happens ahead of harvest pressure remains to be seen.
Who knows what way the weather will pan out for maize production, both globally and in the US. If dryness persists, maize yields may well come in below trend and even the rumour of this would cause excitement in markets.
Native physical prices remain broadly similar in nominal terms due to the lack of active buying.
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Global futures markets weakened further last week, but they had recovered slightly from their lowest points by last weekend. All markets fell – wheat, maize and soya beans – but the latter has possibly suffered the greatest fall. It is my guess that the slight recovery ahead of last weekend was a balancing act following the overreaction that the market makes in either direction.
Politics continue to be the dominant influence in market sentiment. US tariffs are centre stage, along with retaliatory reactions of other countries. It seems likely that such reactions will be a major factor in the near-term, but it also seems inevitable that trade direction will rebalance and that market fundamentals will once again drive market decisions.
In the short term, markets are trying to unravel the consequences of the EU imposition of a 25% tariff on US maize.
While there is acknowledgement that wheat will be scarce, it is caught in the political turmoil affecting all grain prices. It will recover, but whether that happens ahead of harvest pressure remains to be seen.
Who knows what way the weather will pan out for maize production, both globally and in the US. If dryness persists, maize yields may well come in below trend and even the rumour of this would cause excitement in markets.
Native physical prices remain broadly similar in nominal terms due to the lack of active buying.
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