It’s currently a wait and see game for traders who trade corn and soybeans on the Chicago Board of Trade (CBOT).
“It looks like we’re going to be concerned a lot about what happens with our friends from China here in the short term,” said Jack Scoville, with Price Futures Group in Chicago, Ill. on the morning of July 5.
Today is the day when the United States is set to place US$34 billion in tariffs on Chinese goods. China has already said it will retaliate fast with its own – those tariffs will include soybeans.
“How fast (does China) respond and retaliate of course is of vital interest to us all,” Scoville said.
China is one of the top buyers of U.S. soybeans and for months now the market has been in a tizzy. Commodity prices have dropped as statements have flown back and forth between the two countries. Soybean markets have dropped with every new headline.
As of close on July 5, the August soybean contract ended the day at US$8.38 per bushel, after having dropped during the day. Depending on what China’s reaction is on Friday, Scoville thinks the market could see another drop.
“I think that even though you see a big down early in the day, tomorrow you could see the market rebound and even close higher,” he said.
Traders are also paying attention to weather in the midwestern U.S. There are showers in the forecast, but Scoville said the rain hasn’t fallen yet.
“If we come back here on Monday morning…and it’s going to be hot and dry I think we could see the market try and rally,” he said.
The September CBOT corn contract ended July 5 slightly lower at US$3.52 per bushel.