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Commentary
Global trade, U.S. tariffs and worries about slowing global economic growth are gripping the commodity sector, including grains, and with mostly price-bearish consequences. The soybean complex was hammered all session as the Spec sector used soybeans as their mode of response to the China retaliatory tariffs to the US. The 34% tariff added to US imports put the soy complex on the defensive. In the short term there is 600K of unshipped and cancelable soybeans available for China to make a statement. Otherwise, China even without the trade war wouldn’t be in to buy US origin until US harvest. So, I believe this to be somewhat of an overreaction but will let the technical levels be the guide here. The 30 cent move lower did take out a key level of support on the charts at 997. Next levels down are 967 and 961 in May beans. A close under these levels and the December lows at 945 could be tested. Resistance is the aforementioned trendline at 997. Consecutive closes over could push the market to 1010/1014. And then key resistance at 1018. It’s a noise driven market now with potential that last minute deals to avoid a longer-term trade war still possible. At the end of the day weather and its impact on future yields will be the price driver for the 25/26 bean crop.
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Sean Lusk
Vice President Commercial Hedging Division
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