Given the headline driven nature of the markets and two sided trade this week in corn and soybeans where we still remain range bound, lets surmise the last 24 hours regarding potential trade deals and pacts with China. President Trump indicated that US/China are making progress on trade, but it will be up to Trump to decide if a final pact can be achieved in face-to-face presidential negotiations – likely sometime in March. The President hinted that this would be this would be the “biggest trade deal ever”. No exact numbers were offered, but we all need to remember that China pledged $1 Trillion dollars in US purchases into 2024 back in mid-January.
The US stock market has rallied sharply amid China/US trade optimism. The US/China delegation will be arriving early next week for a new round of talks. Its expected that if enough progress can be reached, that President Trump and Chinese President Xi will be holding a trade summit. President Trump offered that he may invite Democratic leadership to join. It seems as optimism in the stock market may have prevented grain markets from pushing to new yearly lows in corn and beans, and with March contract rolls concluding next week, optimism off of fresh demand from a trade deal has held the soy complex to hold 3.05 in meal and 9.00 in beans. Corn which could be the biggest benefactor of a potential trade deal with China from a demand standpoint remains mired in a tight wedge formation. I have no recommendations at this time into the weekend. This is due to the headline driven nature of this market and since its a three day weekend, I’m waiting for comments by Lighthizer, Kudlow, or Mnuchin or even the head Chinese negotiator on any supposed deal or progress. If the US kicks the can another 60 days on tariffs going up 25 percent, I would be a seller of any rallies in corn and beans as I see longs throwing in the towel as perceived demand entering into the market erodes away.. I can send you our charts to your email, slusk@walshtrading.com or call me at 888 391 7894.
Please join me for a free grain and livestock webinar next Friday at 2:30p. Supply, Demand, Trade Ideas, Weather, discussed.