MarketsFarm — With the daily talk about Russia’s invasion of Ukraine, Scott Capinegro, president of Barrington Commodities at Barrington, Ill., has a special term for its effects on the Chicago Board of Trade (CBOT).
“I call it the Putin rally,” he quipped, referring to Russian President Vladimir Putin, but lamenting the chaos the seven-month-old war still has on CBOT and other markets.
“I’m getting so tired of trying to trade grains on statements coming from Ukraine and Russia, it’s just insane. It’s like there’s no reason to have a position. Just trade the market during the day and be even and start all over again the next day,” he added.
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Capinegro pointed to the U.S. wheat complex, which on Wednesday was on the rise largely because of recent comments Putin made. The Russian president said the Ukrainian territory that Russian forces still occupied will have referendums to determine whether they remain part of Ukraine or not — a proposal over which the world community has grave doubts. Putin also announced 300,000 military reservists will be called up to bolster the ranks of Russian forces in Ukraine.
However, Capinegro pointed to the U.S. dollar, which has continued to gain strength and weigh on values. The U.S. Dollar Index, which determines the value of the greenback against six other major world currencies, pushed higher at 110.775 points and was in striking distance of the 52-week high of 111.360. That, he said, puts great pressure on U.S. wheat, soybeans and corn.
“We have the world’s most expensive corn; the dollar is getting stronger again and market is trying to rally corn. It just doesn’t make sense sometimes,” he said.
He also expressed caution over the U.S. Department of Agriculture’s (USDA) forecast of a 200 million-tonne carryout for 2022-23 soybeans.
“I just don’t see the demand being as robust as the USDA is saying,” he said.
As U.S. soybean and corn harvests begins to pick up the pace, Capinegro cited his golden rule.
“When we are harvesting and the market doesn’t break, you don’t want to be short. Something else is going on,” he warned.
— Glen Hallick reports for MarketsFarm from Winnipeg.
