Potential China Deal Weighing on Grains

February 22, 2019 8:43AM CST

Strength in soybeans yesterday was on renewed optimism from traders that China would return as a larger buyer of U.S. agricultural products after comments were made by trade officials. Rumors say that China said they would purchase an additional $30B a year of our grain products, such as beans, corn and wheat if a trade deal with U.S. is finalized.  Support was also seen from the USDA estimate for 19-20 soybean acres at 85 million compared to 89 million last year and average estimate of 86.1 million.  March beans have traded in a 38-cent range so far for the month of Feb, but for the week, the market is up just over 3 cents.  Resistance comes in at 919 and 926 with support at 902 and 893.

The corn market is in a position to see a major rally if China is a significant buyer of U.S. corn.  The USDA released their first look at the new crop season with ending stocks pegged at 1.65 billion bushels, down from 1.735 billion.  If China purchases 250 million bushels, this would leave ending stocks sharply lower.  Similar to the beans, the market was supported by the news of China possibly buying $30B in agricultural products.  Resistance comes in at 378 and 384 with support at 371 and 366.

Soybeans Mar '19 Daily Chart

Soybeans Mar '19 Daily Chart

Corn Mar '19 Daily Chart

Corn Mar '19 Daily Chart

If you would like to learn more about agriculture futures, please check out our free Fundamental of Agricultural Futures Guide.

Request My Copy

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.