CBOT weekly outlook: African swine fever paralyzes futures

MarketsFarm — Ahead of the U.S. Department of Agriculture’s next crop report due out March 29, market experts are looking to headlines for direction in the Chicago futures.

U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin return to China next week, with the goal of hammering out a trade deal in weeks to come.

Managed funds are in an unusual position for this time of year, said Rich Feltes, vice-president of research for R.J. O’Brien.

Markets are “short wheat, corn, soybean, and cornmeal, and that is an unusually high risk position at the front end of the growing season,” he said.

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The African swine fever (ASF) panic, which has dominated headlines for days, is not under control yet. Feltes predicts a direct correlation between ASF and market shorts, as concerns of ASF indicate lowered global demand for corn and soybeans.

The May soybean contract began February with prices peaking at $9.45 per bushel, and fell below $8.90 on March 12 before recovering to settle Wednesday sat $9.0525.

“We have this big break from February highs to early March lows, we’ve come back somewhat but I think now we’re just in consolidation phase,” Feltes said.

“We’re marking the time and waiting for the calendar to advance on the acreage reports to see how early April unfolds.”

Traders also have their eye on legal developments that could impact glyphosate use. While there is no danger of a ban for the 2019 growing year, experts are keeping an eye on future implications.

A federal jury in the U.S. recently concluded Bayer’s Roundup herbicide was a significant factor in causing a California man’s cancer. The case is the first of its kind to be tried in federal court, while thousands of cases against Bayer and its Monsanto subsidiary are pending at the federal and state level.

“If these cases keep coming up, we’ll have to sit down and put a pencil to what it would mean if U.S corn and soybean growers couldn’t use Roundup,” Feltes said. “That’s a very serious question.”

— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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Glacier FarmMedia, a division of Glacier Media, is Canada's largest publisher of agricultural news in print and online.

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