CBOT weekly outlook: Soy, corn follow trade talks closely

Talks between the U.S. and China taking place in Washington this week are being followed closely by Chicago Board of Trade soybean and corn traders, with optimism over improving relations between the two countries helping prop up the futures.

“The U.S./China talks will be on the top of all traders’ minds,” said Terry Reilly, of Futures International in Chicago, adding “there’s renewed optimism that a deal will get done and China will return to the U.S. and buy not only beans, but also corn and maybe some wheat as well.”

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If a deal is reached, he said, there was some upside potential in soybean prices. Technical signals are also pointing higher, with a move above the 200-day moving average in the March contract on Wednesday.

He placed an upside target in the March contract around US$9.30-$9.40 per bushel.

Corn is expected to remain in a sideways trading range, with an upside breakout possible to the US$3.85-$3.90 area.

“What we’d need to kick that off would be strong export sales and shipments” reports from the U.S. Department of Agriculture, Reilly said.

USDA is expected to resume its updates on export sales Thursday, after the month-long partial government shutdown. However, the release schedule won’t see current information released until later in February, as the agency catches up in its reporting.

Monthly supply/demand data and final production numbers for 2018 will be released by USDA on Feb. 8.

U.S. corn is competitive on the export market, and Reilly expected to see an increase in bookings over the next few weeks.

For wheat, “we may see southeast Asian business pick up for U.S. wheat,” according to Reilly, noting that increased export sales would underpin the futures.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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