CBOT weekly outlook: Bear market aches for bull news

CBOT July 2019 corn (candlesticks), with July 2019 soybeans (green line). (Barchart)

MarketsFarm –– The Chicago Board of Trade (CBOT) is currently a bear-market, according to broker Scott Capinegro of Barrington Commodity Brokers.

“It’s like the markets are saying ‘Show me something, we’ll take anything,’ but the bears are winning,” he said, noting there has been almost no news to drive the market in a bullish manner.

One example would be any news from U.S./China trade negotiations. If there has been positive news, the commodity markets have reacted in such a way, but this week there has been nothing so far.

Capinegro suggested a summit between U.S. President Donald Trump and Chinese President Xi Jinping would provide that kind of spark, “otherwise the market doesn’t care.”

Being mid-April, weather has yet to become a major factor and the broker said farmers are not that far behind with spring planting — although they have some field work left over from the fall to catch up on, such as spreading nitrogen.

Of the price of corn, Capinegro said farmers see the crop isn’t that profitable.

“They’re saying, ‘Am I going to make the money from this crop when I can almost make the same thing with preventive planted acres?’” he said, noting crop insurance does help smaller farmers stay in business.

While African swine fever (ASF) has wrought havoc on China’s hog population, Capinegro said that country’s demand for soybeans sustained bids of US$9 per bushel on CBOT for several months.

Despite the South American soybean crop having entered the global market, he said Brazil and Argentina are not in the driver’s seat. China “is not in a big rush” to buy from them.

Also regarding ASF, Capinegro said there has been a fear of it spreading to the U.S. “That would just finish off the demand for wheat, corn and beans.”

On wheat, he said the U.S. has continued to face strong competition from Russia and Ukraine.

— Glen Hallick writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market reporting.

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