With Midwestern harvest operations nearing completion for the year, the range-bound United States grain and oilseed markets are looking for fresh news to provide direction.
Soybean, corn and wheat futures all remain stuck in relatively sideways trading patterns and “the only thing that will change that is an adverse situation in South American weather, which is not on the horizon, or a breakthrough on the U.S./China trade situation,” said Rich Feltes, of RJ O’Brien in Chicago.
Feltes said many participants remain skeptical about whether anything would happen on trade quickly or not. However, even if something does happen to spark a rally, the upside would be limited in soybeans due to large amounts of South American and U.S. hedges waiting above the market.
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Wheat could see some strength, according to Feltes, but traders are waiting for Russia to exhaust its exportable supplies.
“Increasingly, the market is arriving at the conclusion that China is successfully finding a way to do without U.S. soybeans,” said Feltes. The U.S. will still be filling non-China business, but China may reduce its overall need for soybeans. Questions over South American acreage increases, as the global trade flows incentivize more production there, will also linger.
Losses in crude over the past month are another ominous sign for all commodity markets, said Feltes noting that people were taking risk off the table across all asset classes.
From a chart standpoint, he saw January soybeans trading in a range from US$8.50 to US$9.00 per bushel. December corn was hovering between US$3.60 to US$3.80 per bushel, and December Chicago wheat was at US$4.80 to US$5.20 per bushel.
“We’re just stuck there trading back and forth… people are picking each other’s pockets at this time of year,” said Feltes.
