CNS Canada –– Soybean futures on the Chicago Board of Trade have been trending weaker during the New Year, but futures were quiet during the week ending Wednesday, as traders await to see if China will cancel U.S. soybean shipments.
“China is going to have to start cancelling, or we’re going to have to rally and ration some of this supply out there,” said Scott Capinegro, president of Barrington Commodity Brokers in Barrington, Illinois, before adding that the market won’t do much until it knows what China’s intentions are.
“Beans were in a penny and a half range for two hours on Tuesday (all figures US$). Whether they’re waiting to see Thursday’s exports and see if any cancellations show up, that’s a possibility. Trade is non-eventful.”
Capinegro noted that despite strong U.S. Department of Agriculture export inspections data on Monday, the concern of good South American production erased any hopes of a possible rally this week.
“Looking at the big picture, Monday’s export numbers were huge for beans, but here we are on Wednesday down below $12.80 (per bushel),” he said, noting Brazil is expected to harvest a record large crop due to great growing conditions.
“We’re lower for the week and beans are still lower for the year. So, the big picture says we know South America has a crop and it’s not going away. That’s the bottom line.”
Looking at the market in the near-term, Capinegro said it has the potential to swing wildly in either direction depending on China’s actions.
“I would say we could probably see a 50-cent (per bushel) drop from here” if China cancels U.S. shipments, he said. “We’re going to rally March back over $13 (per bushel) with no problem if they don’t cancel.”
Shifting focus to the corn market, prices continue to trade in a narrow range amid a lack of fresh news, he said.
“We’re in the same trading range that we’ve been in for the last four weeks,” he said. “And, we had a three-cent range on Tuesday. There’s just nothing to talk about with corn.”
Capinegro said the issue is that there is just too much corn, and when the market slightly rallies, growers sell.
“I know a lot of people who’d like to see it get up to US$4.40 per bushel on the futures, but everyday somebody in the U.S. sells corn out of his bin,” he said. “We’ve got a big crop.”
Looking forward, the corn market is expected to remain rangebound.
“There’s a February USDA report, but that’s nothing earth-shattering. It would be the March report that has the planting intentions and stuff like that,” Capinegro said, when looking at possible upcoming market movers. “We could stay very, very quiet.”
– Brandon Logan writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.