CBOT weekly outlook: Quiet markets wait on USDA reports, China sales

CBOT March 2019 corn with Bollinger (20,2) bands. (Barchart)

Pending the release of U.S. Department of Agriculture (USDA) reports on Friday, trading on the Chicago Board of Trade (CBOT) has remained quiet, according to one broker, who was cautious about U.S. soybean sales to China.

Following the 35-day partial U.S. government shutdown that ended Jan. 25, USDA will have taken two weeks to prepare the release of backlogged reports.

Scott Capinegro of Barrington Commodity Brokers at Barrington, Ill. stressed that it remains “anyone’s guess” as to how the markets will react come Friday.

“I’m hoping (USDA reports are) going to be a little bit friendly for corn and wheat. Beans will be more ‘neutral-ish,’ maybe a little bit bearish as usual,” he said.

For March corn, Capinegro said he would like to see the price rise to around US$3.90 per bushel, some 10 cents more than it is now on the CBOT.

Although trade negotiations between the U.S. and China recently ended in Washington, D.C. on a positive note and further talks are set to resume later this month in Beijing, Capinegro was somewhat pessimistic regarding soybean sales to China.

As part of the Washington talks, China agreed to purchase five million tonnes of U.S. soybeans.

“You can book them, but its’s still shipments that count,” he commented.

Capinegro pointed to South America, as the soybean harvest is underway in Brazil and Argentina and their large crops could impede U.S. exports, as China could switch sellers.

While Brazil’s soybean harvest has been downgraded because of dryness during the growing season, an independent estimate expects the country to reap about 112 million tonnes, according to a media report.

“Don’t be surprised down the road all of a sudden to see some cancellations from China,” Capinegro said, noting this has occurred before.

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

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