CBOT weekly outlook: Trade news having little effect

CBOT March 2019 soybeans, with 200-day moving average. (Barchart)

CNS Canada — Even though news out of Beijing regarding the trade talks between the U.S. and China were reported as ending on a positive note Wednesday morning, one broker watching the Chicago Board of Trade didn’t see it having much effect on commodities.

“The only thing that would be a real positive announcement would be if they took the tariffs off of U.S. beans. And I don’t see that them doing that,” said Scott Capinegro of Barrington Commodity Brokers in Barrington, Ill.

From Monday to Wednesday, the respective mid-level trade delegations met in the Chinese capital trying to find ways to end the trade war between the world’s largest economic superpowers. An official statement on the talks is scheduled to be released Thursday.

“They’re front-running all this news. So it’s going to be ‘buy the rumours, sell the facts’ kind of deal,” he said.

Even if China purchased 300 million bushels of soybeans the U.S. would still be left with a 600 million-bushel carryover, according to Capinegro.

Instead, the broker viewed the dryness in Brazil as being of greater interest. A lack of precipitation in recent weeks forced projections of a record soybean crop to be revised downward.

“If Brazil shows signs of rain, we’re going to see some breakage,” he said.

In the meantime, Capinegro noted, the ongoing partial shutdown of the U.S. federal government has continued to delay reports from the U.S. Department of Agriculture including daily reports, crop production reports and world supply and demand estimates (WASDE).

“There’s a little bit of uncertainty, but to be honest, since the shutdown the markets have rallied,” he quipped.

Regarding soybeans, Capinegro said there will likely be some resistance with the 200-day moving average, with March soybeans around the US$9.30 per bushel mark.

As for March corn, he said, there are hopes it could reach US$3.90 per bushel.

Otherwise, Capinegro said, markets are sideways, with not a lot happening.

“We might be looking at this year at the seasonal plays,” he said. “Because there might not be any weather we can play with, any other news, so the seasonals may come into play more, just because we know it makes the market move a little bit.”

— Glen Hallick writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.


Stories from our other publications