The days following a successful Donald Trump/Xi Jinping supper meeting were supposed to have been all about the launch of soybean futures. Instead of a drive higher following Saturday’s G20 dinner, the market has been timid at best and perhaps somewhat confusing, at first glance.
On Tuesday’s RealAg Radio show, Chip Flory, host of AgriTalk, joined Shaun Haney to talk about the surprise and confusion coming off a somewhat positive trade weekend.
In regards to lean hog futures, Chip says, “The one that leaves me scratching my head the most is the hog trade. China’s dealing with ASF will be one of the factors driving China back to the table, but the hog market on Monday and Tuesday has shown that it is unimpressed over the trade truce.”
On Wednesday, Feb ’19 Lean Hog futures were up US$1.70 erasing the losses from earlier in the week.
Soybeans have had three up days, but many would agree that the trade truce has not been the launch pad people expected prior to Saturday.
On Tuesday, Flory concluded that, “On soybeans, it has been a timid price recovery, so we are not just chasing shorts out of the market but there was fresh buying as open interest was higher on Tuesday. All of a sudden I am a little more optimistic than I was the day before.”
Overall , farmers are encouraged by the potential for normal trade patterns to return, but there is skepticism with the amount of soybeans in carryover and orders not flowing in yet.
Farmers will be a a very BIG and FAST beneficiary of our deal with China. They intend to start purchasing agricultural product immediately. We make the finest and cleanest product in the World, and that is what China wants. Farmers, I LOVE YOU!
— Donald J. Trump (@realDonaldTrump) December 3, 2018
According to Shaun Haney, host of RealAg Radio, the markets lack of enthusiasm “is maybe an indication that the market is telling President Trump that we have been down this road before with big promises and it now wants to see action.”
Flory and Haney agree that the supper meeting result is a positive although the 90-day timeline could be defined as aggressive to get accomplished what the United States wants.