Glacier FarmMedia COVID-19 & the Farm

CBOT weekly outlook: Soy, corn traders shift gaze to U.S.

(Lisa Guenther photo)

CNS Canada — As February ends, attention is shifting from South America to the U.S. for traders at the Chicago Board of Trade.

“We’re about to flip the calendar into March, when people start paying more attention to the conditions in the U.S.,” said Rich Feltes of RJ O’Brien in Chicago.

Attention for the past few months has been focused on Argentina, where crops are being harvested in drought conditions.

Over the past week, the drought continued to affect CBOT markets, with March corn rising from $3.6575 per bushel on Feb. 21 to $3.745 per bushel at close Wednesday, and March soybeans rising to $10.45 from $10.3525 in the same period.

“We’re putting out new highs in everything but soybean oil. I mean, it’s all driven by this Argentine situation, the ongoing outlook for dryness, and we got a couple of new elements,” Feltes said.

A Bloomberg article Monday, detailing how Argentina’s drought has affected commodity markets, attracted outside institutional investment supporting the market, Feltes said.

There is concern for a potential shortage of soybean meal due to drought in Argentina, the world’s largest exporter of soymeal. Traders aren’t concerned about a shortage of soybeans, just meal, Feltes said.

In the U.S., concern is mounting over the southern Plains, where a lack of precipitation over the winter has led to drought conditions. Along the upper Mississippi and Ohio rivers, there has been excess moisture, causing flooding and halting grain shipments.

There has also been concern in the ethanol sector, with oil refineries pushing for the U.S. Renewable Fuel Standard to be changed to require less ethanol to be mixed into fuel.

U.S. President Donald Trump held meetings Tuesday regarding potential changes but no decisions were made. This won’t end the debate, Feltes said.

“The refiners are making a very strong case that they’re getting stiffed with the cost of managing compliance in the ethanol mandate… I think you could make a strong policy statement that it is not and so I think Trump’s looking for a shared-burden type of outcome.”

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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