Speculation regarding a potential trade deal between the United States and China is sparking movement on the Chicago Board of Trade (CBoT).
Ryan Ettner, broker for Allendale Inc. in McHenry, Ill., said there was optimism on the markets last week when trade representatives from both nations restarted talks. With the countries’ current deal expiring at the end of 2021, murmurs of its extension are having a bullish effect.
“We’ve only just begun talking with China about any potential trade deals…There wasn’t too much hope we’ll have a trade deal done in time when this one expires,” Ettner said. “Now that the talk is we’re just going to extend the current one, that is optimistic. That is something we can get done in a couple months’ time.”
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He added that out of all grains, corn would be the most affected by a new trade deal with China. Without a trade deal, China would only buy 10 per cent the amount of corn if there was one in effect, according to Ettner.
“If we lose the trade deal, we’ll still have a solid amount of Chinese buying that we’ve always had for (soybeans). But for corn, China just doesn’t buy that much and the trade deal sparked a lot of China buying corn they don’t usually buy,” he explained.
Rising oil prices and rallies in stock markets have resulted in a series of macrobuying, raising grain prices, according to Ettner. While corn was above technical levels, a bounce in soybean prices was not enough to get out of a “downward channel”. Wheat prices, especially in Minneapolis, have also rallied in sympathy with French milling wheat reaching new contract highs.
“I would have to say we’ll have to wait and see what news is truly moving (the markets) and how much we believe in (them) and how much we feel (the news) can impact the markets,” Ettner said.
