A Week of Trading Politics at the CBOT; Brazilian Soybean Harvest Gains Speed

Feb 11, 6:58 am | Morning Commentary | Share this:

 ** 6:30 AM CBOT Futures: Mar soybeans are down 1.00 cents at $9.1350, Mar corn is down .50 of a cent at $3.7375 and Mar Chi wheat is down 3.25 cents at $5.14

** AgResource Morning CBOT Comment/Analysis: Good Morning! The week has started out mixed and in low volume at the CBOT. The February USDA Crop Report is being traded outside of the US while the Trump Administration is contemplating another shutdown as Congressional negotiations on the Budget Pact (and the Wall) have stalled. A deal needs to be reached by Friday or the US Gov’t could go back into furlough. President Trump could invoke emergency powers to fund his US/Mexico border wall before a second lasting shutdown.

  Also, in high drama, the US/China trade teams have held a day of meetings in Beijing to work out a trade pact. World equity markets have high hopes for progress with the Shanghai Index gaining 1.4% following their Lunar New Year holiday. Asia has reopened for business following the week long holiday.

  Trade negotiations always goes down to the final hour before a deal is reached. We expect nothing less from the US/China in coming weeks. ARC is optimistic that a deepening trade war can be averted and that enough progress will be scored to keep the negotiations going past March 2nd without an increase in tariffs. Should that occur, we expect that China will have to pledge to secure additional US ag and energy goods as a sign of good faith to keep tariffs at current levels.

  Indonesia is reported to have secured 60,000 MTs of US wheat in the past week with additional interest noted. Its expected that Indonesia booked SRW wheat – the cheapest wheat in the world. Indonesia does not allow corn to be imported to protect its own domestic producers, so there has been a big leap in wheat imports with much of the wheat turned into livestock feed.

  South American weather forecasts are favorable with near to above normal rain for the entirety of Brazil while Argentina enjoys needed sunshine and drier weather conditions. Temps across Argentina look to average out to near to below normal, which along with adequate soil moisture favors filling corn and blooming soybeans. There are hints for the return of the December/January weather pattern in the closing days of February and March, but confidence in such an extended forecast is low. ARC advises clients to monitor the forecasts

  US weekly export inspections for the week ending February 11th are expected to show; 16-20 Mil Bu of US wheat, 37-43 Mil Bu of soybeans, and 34-39 Mil Bu of corn. China continues to rapidly ship out its soybean purchases.

  The Brazilian soybean harvest has reached 26% completed vs the 5-year average of 12% according to Brazil’s AgRural. Yields are extremely variable.

   Its another day of choppy CBOT trade awaiting US/China trade developments. Don’t sell breaks or buy strong rallies.