Last week wheat prices in Chicago rose by 3.8% to $5,18/Bush ($190/ton). The main growth factor was the warming Chinese-American relations. On Friday it became known about the termination of anti-dumping investigation of China against the supply of sorghum from the United States and the abolition of 178% prohibitive tariffs. On Saturday, Beijing and Washington released a joint statement agreeing "to significantly increase agricultural and energy exports, the United States."
China – world's largest importer of agricultural products and important customer for American farmers that sell to Beijing products to $20 billion a year. In previous weeks, the market was anxiously trying to assess how tensions between Beijing and Washington will affect the U.S. supply in the country.
On Monday, the optimistic statements from Washington and Beijing has largely dissipated. Market participants pay attention to the fact that no specific figures are not stated in the document. In the morning, wheat in Chicago has lost about 2%.
Export prices for Russian wheat with 12.5% for last week was down $0.5 to $212 (FOB deep-sea ports). New crop wheat for delivery in July traded at $200/t.
The wheat futures July 2018, CBOT, USD/BU
What does it mean?
If Beijing really stimulates purchases of American products, the demand for deliveries from other regions will decrease. Among the victims may be Ukrainian, but at the same time the Russian corn. Active purchases of China in the last month, clocked a market of the black sea corn.