From trade talks to ramifications of the government shutdown, there is much on the minds of traders to open 2019.
The U.S. and China set up in-person meetings for the week of Jan. 7 as they try to lay more of the groundwork for a trade deal.
While it is unlikely a deal will be worked out in the first full week of January, CHS Hedging market analyst Steve Hyde said the main thing to watch are the headlines that come with talks.
“You are going to be greatly affected by headlines,” Hyde said. “… Supposedly they’ve been having some phone conversations as far as trade goes. I have no idea what the inputs been. It seems like, when you read stories, that maybe the needle is moving a little bit, but I would have no idea as to the extent. It will take time.”
Positive news from the trade talks will ease concerns of many U.S. soybean farmers who are looking for additional exports for their product, however, news out of South America hasn’t been friendly to the markets.
The soybean crops in Brazil and Argentina have been promising so far, and while there had been talk of some dryness in Brazil, there will need to be more significant damage to make the markets react positively.
“I think it doesn’t really get too important until you get under 120 (million tons of estimated production) and people see dryness being a bigger problem,” Hyde said.
With ample supplies coming from South America, Walsh Trading’s Steve Bruce said it’s a good time to be China.
“If I was China, I’m sitting pretty right now,” Bruce said. “It’s a buyer’s market. … I hate to be negative to anyone in the world, but if Brazil had a major disease or something happened to their bean crop, we’d benefit.”
With all that, the U.S. has been dealing with the effects of a government shutdown which started after Dec. 21. There are concerns about how the USDA will handle delays of their potentially market-moving reports.
“What if the shutdown goes three or four more weeks?” Hyde said. “Then there’s going to be a lot of pent up anxiety about ‘When are we going to get the reports? When are we going to get this or that?’“
Postponing the WASDE report, scheduled for Jan. 11, would have major implications.
“It really is the mother of all reports,” Bruce said. “It’s a big report, and we might not get it. We might be flying blind as opposed to year’s past.”