CBOT weekly outlook: Brazil, China drive U.S. commodities

CBOT March 2019 corn futures, with March 2019 soybeans in red. (Barchart)

With little data filtering out of the U.S. Department of Agriculture (USDA), news from Brazil and trade negotiations with China are currently driving futures contracts on the Chicago Board of Trade (CBOT).

“It’s Brazilian weather over there and the Chinese negotiations, which sometimes are on and sometimes aren’t,” said Jack Scoville of Price Futures Group in Chicago.

CBOT soybean contracts were down Tuesday after a news report said trade negotiations between China and the U.S. were off. The White House later said this wasn’t true. This was slightly supportive for the soybean market.

“We’re hoping (the China/U.S. trade meetings) will yield a lot of progress on various issues, intellectual property issue especially and that they’ll continue to kick the can down the road,” Scoville said.

Soybean prices also felt pressure after the Brazilian real tumbled in value following a speech from Jair Bolsonaro, the country’s president, on Tuesday at the World Economic Forum in Davos, Switzerland.

“That kind of took things down for a while too and now the real’s kind of stabilized,” Scoville said.

Wheat markets have been finding support from outside markets, according to Scoville. In Russia and Europe wheat prices have been strong, which has been supportive for U.S. markets.

The lack of data from USDA due to the ongoing partial government shutdown is making trading commodities harder, he said.

“No export news at all, no demand news at all, except for the weekly export inspections report which is well after the fact. We’re searching for news, you’ve got to work hard these days,” Scoville said.

A lot of customers, including buyers and sellers, Scoville said, are also starting to pull back due to the lack of data. This is making it harder for brokers to make a profit.

“You never know what tweet’s going to come out next and screw up what had been a wonderfully profitable position or at least not a horrid position. You can get hammered in half a tweet,” he said.

— Ashley Robinson writes for MarketsFarm, a division of Glacier FarmMedia specializing in grain and commodity market analysis and reporting.

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