CBOT weekly outlook: Soybeans wait on China news

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Published: January 2, 2019

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CNS Canada — Soybean futures at the Chicago Board of Trade started 2019 on a firm note, bouncing higher on rumours of fresh Chinese buying interest.

However, with the U.S. government still in partial shutdown mode, confirmation of that business was lacking and additional advances remain questionable.

“We’re basically buying the rumour at this point,” said Terry Reilly of Futures International in Chicago. Concerns over hot and dry conditions in Brazil were also supportive, he added.

With China and the U.S. set to meet for talks in early January, any developments on that front have the potential to move the soy market. However, Reilly noted, “the ideal window for the U.S. to sell soybeans to China is rapidly closing.”

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U.S. wheat futures closed higher on Thursday on concerns over the limited availability of supplies for export in Russia, analysts said.

While any weather concerns in Brazil and Argentina have the potential underpin the futures, traders still anticipate large crops from the region and the newly harvested South American supplies will soon be finding their way to the export market.

The U.S. Department of Agriculture’s much anticipated January supply/demand report is scheduled to come out Jan. 11. The report usually provides some mid-winter direction for the futures.

However, with the government still in shutdown mode, that date will likely be pushed back, keeping some uncertainty in the futures markets, according to Reilly.

Another factor to watch will be the rebalancing of index funds, which Reilly said will take place starting Monday.

Corn futures were steady to start the New Year, with volatility in outside energy, equity and currency markets likely to keep some caution in the grain in the short term.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

About the author

Phil Franz-Warkentin

Phil Franz-Warkentin

Editor - Daily News

Phil Franz-Warkentin grew up on an acreage in southern Manitoba and has reported on agriculture for over 20 years. Based in Winnipeg, his writing has appeared in publications across Canada and internationally. Phil is a trusted voice on the Prairie radio waves providing daily futures market updates. In his spare time, Phil enjoys playing music and making art.

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