WINNIPEG – Soybean contracts on the Chicago Board of Trade could be poised to rally if and when China and the United States reach an agreement over trade issues.
According to Terry Reilly, a senior commodity analyst with Futures International in Chicago, Illinois, people are starting to get excited over rumours a deal may be close.
“I think people are getting bullish on soybeans, now that China can come back and buy cargoes for August, September, October and November,” he said.
He says everyone will be checking the USDA’s announcement system on Thursday and Friday to see if China bought cargoes this week, as some analysts have rumoured.
If that happens and China does turn back to the U.S. for soybeans, Reilly believes the July contract could hit US$10.60 or US$10.70 a bushel.
When it comes to corn, Reilly says the market is rising because of stronger wheat prices.
“Also, there are dryness concerns in northern Iowa and the southern Minnesota border that may affect early corn establishment,” he explained.
Meanwhile, the winter crop in Brazil continues to get downsized due to dryness problems.
“I can’t see the market getting below US$3.95 (per bushel) if we do trade back below US$4.00,” he said.
He adds rain is expected to fall in the southeast next week, which could be slightly bearish for the market.