CBOT weekly outlook: Markets brace for weather, trade war

MarketsFarm — With the U.S. Department of Agriculture’s world agriculture supply and demand estimates (WASDE) report in the rearview mirror, the Chicago Board of Trade is trading largely on weather forecasts and flood reports.

Markets did react, however, when the WASDE report dropped on Tuesday. “We did see some short covering in the market yesterday that spilled into today,” remarked Terry Reilly, a grains analyst for Futures International.

Unfavourable spring weather and flooding are supporting prices and keeping cash movement to a minimum.

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“Especially in the northern half of the U.S., the current snowstorm and heavy rain is impacting about half of the growing region,” said Reilly.

“Planting delays are at the top of everyone’s minds.”

Some cash locations for corn and beans have firmed up, he said, thanks to lack of availability.

Currently, parts of the Missouri River and Red River basins are flooding, and locks on the Mississippi River are closed for the foreseeable future.

Markets are also watching U.S.-China trade negotiations carefully, as a deal has yet to be announced. Some are beginning to wonder if a deal will ever be reached.

“If we have to rely on the U.S. opinion that everything is going well, I think traders are waiting on confirmation and big purchases from China.”

Until a trade deal is hammered out, soybeans will remain around $9 per bushel, limiting corn rallies (all figures US$).

“I don’t see corn breaking above $3.75 for that reason,” said Reilly.

“It’s basically a wait-and-see thing,” he said. “If a resolution does get done, and China comes in and buys a large amount of soybeans and corn and byproducts like everyone was hoping for, we’ll see an initial pop in the market.

“The timing is still the biggest unknown.”

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

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