Glacier FarmMedia | MarketsFarm – Grain prices at the Chicago Board of Trade went sideways to lower during the week ended Dec. 4 with geopolitics and policy in the forefront of traders’ minds.
Terry Reilly, senior agricultural specialist at Marex in Chicago, said United States president-elect Donald Trump’s plans to impose tariffs on Canadian and Mexican imports were the main topic of discussion. However, Reilly believes the three nations can sort out their differences in due time.
“I’m confident the new U.S. administration that’s coming in will come to a compromise with Canada and Mexico before the inauguration,” he said. “I think the trade is also starting to realize that Canada, Mexico and China are all talking to the U.S. … I think the trade is trying to figure out where to go from current levels, but I think tariffs are already partially factored in.
Read Also
U.S. livestock: Feeder cattle extend rally to new highs
Chicago Mercantile Exchange feeder cattle futures extended gains to record highs on Wednesday while live cattle futures set a contract high before pulling back.
“But it’s really an unknown for the Canadian side. The U.S. is dependent on Canadian wheat and we’ve taken a lot of canola oil as well,” Reilly added.
Potentially large corn and soybean crops in the U.S. and Brazil, respectively are putting pressure on prices, Reilly noted. However, wheat prices could become higher if exports ramp up.
“The weather in South America has been fantastic and it’s taken a toll on the soybean market,” he commented. “With that said, I see that beans have potential to the downside unless weather problems appear in South America. Especially if tariffs are slapped on countries that depend on beans.”
The U.S. Department of Agriculture will release its monthly World Agricultural Supply/Demand Estimates on Dec. 10, a report Reilly described as typically “benign”. However, he thinks the upcoming report will provide an opportunity for the USDA to raise its estimates for corn and soybean exports.
“(The soybean) crush has been a little bit better than expected, but I don’t think the USDA will make major changes to the beans. If they do, they would tighten the carryout by taking exports up. For corn, it could tighten up 25 million to 50 million bushels but that can easily offset by lower feed because a lot of meal is being consumed,” Reilly said. “Outside of the U.S., I don’t see any major changes in the global numbers at this point.”
He also doesn’t expect prices to find direction, one way or the other in the coming weeks.
“I think everything will be choppy, unless headlines or geopolitical events arise,” Reilly added.
