CBOT weekly outlook: Soybeans wait on China news

CNS Canada — Soybean futures at the Chicago Board of Trade started 2019 on a firm note, bouncing higher on rumours of fresh Chinese buying interest.

However, with the U.S. government still in partial shutdown mode, confirmation of that business was lacking and additional advances remain questionable.

“We’re basically buying the rumour at this point,” said Terry Reilly of Futures International in Chicago. Concerns over hot and dry conditions in Brazil were also supportive, he added.

With China and the U.S. set to meet for talks in early January, any developments on that front have the potential to move the soy market. However, Reilly noted, “the ideal window for the U.S. to sell soybeans to China is rapidly closing.”

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While any weather concerns in Brazil and Argentina have the potential underpin the futures, traders still anticipate large crops from the region and the newly harvested South American supplies will soon be finding their way to the export market.

The U.S. Department of Agriculture’s much anticipated January supply/demand report is scheduled to come out Jan. 11. The report usually provides some mid-winter direction for the futures.

However, with the government still in shutdown mode, that date will likely be pushed back, keeping some uncertainty in the futures markets, according to Reilly.

Another factor to watch will be the rebalancing of index funds, which Reilly said will take place starting Monday.

Corn futures were steady to start the New Year, with volatility in outside energy, equity and currency markets likely to keep some caution in the grain in the short term.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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