It has proved to be a bumpy week for markets as the global tariff skirmish continues.
President Trump’s decision to pause tariffs to the baseline 10% except for China, helped calm markets, including grain markets. The latest AHDB Grain Marketing Report shows slight gains for grains over last week’s close, with a small dip in rapeseed prices.
UK feed wheat futures (May-25) recovered slightly, currently standing at £172.50/t, the Nov-25 contract also gained to £188.25/t. Paris rapeseed futures (May-25) fell to €507.75/t. New crop futures settled at €469.25/t.
Price volatility of cereals and oilseeds has increased since the announcement of the tariffs, due to uncertainties around global demand, particularly from China, the world’s biggest buyer.
AHDB’s head of economics Sarah Baker notes that oilseeds have taken the biggest hit, largely because a bigger share of global production is exported, and China is the top buyer of soyabeans. “On average over the past five years, around 44% of soyabean production has been traded globally, compared with 16% for maize and 27% for wheat.”
Since the tariffs came into effect on 2 April, futures markets have reacted, with Chicago soyabean futures (May-25) dropping by 5%, while Paris rapeseed futures fell by 2% by 7 April.
The temporary suspension of tariff increases for most countries, whilst stepping up pressure on China has pushed Chicago futures for soyabeans and wheat sharply higher.
Sarah suggests that how all plays out will become clearer over the next few weeks. However, since US prices often mirror global trends, UK cereal and oilseed prices are likely to be supported in the short term.
However, with President Trump making announcements and then backtracking quite quickly, further political uncertainty should be expected.
