CBOT weekly outlook: Markets at mercy of weather

MarketsFarm — Traders are bracing for more inclement weather to hit the U.S. Midwest, which in turn could rock commodities.

Springtime floods and adverse weather have impacted the majority of the U.S. Plains and Midwest, and those regions expect another snow system before the end of March.

Flooding may delay planting dates, causing farmers to choose faster-growing crops over corn.

“Right now we’re not getting any bullish news on the demand side for both corn and soybean,” said Terry Reilly, a grains analyst with Futures International.

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Weather reports buoyed some markets while tanking others. “We saw market support for wheat because of the weather,” Reilly said.

Unusually cold winter temperatures and spring flooding damaged winter wheat crops, he said. It’s rumoured that spring wheat producers are leaving their fields bare due to further flooding threats.

Bringing further support to wheat prices is the recently-won export contract with Egypt for 127,000 tonnes of soft red winter wheat.

Thanks to Canada’s ongoing trade spat with China, growers in the U.S. may increase their spring wheat seeding in response to lowered demands for canola.

U.S. trade representatives continue trade negotiations with China this week, and Chinese officials are expected to visit the U.S. next week. Similarly, Prime Minister Justin Trudeau has said he’ll consider sending a delegation to China in an effort to end the ban on Canadian canola seed.

Traders are also waiting for the U.S. Department of Agriculture prospective plantings report to be released Friday. Ahead of this report, markets are observing declines in bean prices.

“A lot of traders are thinking that producers at the last minute may be planting more beans and less corn due to the wet spring,” said Reilly.

“That might knock around these markets pretty good.”

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

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