There are oh-so-many factors at play in the oilseed complex, and the latest trade news (hi there, blocked canola shipments) does not bode well for the vegetable oil market. That said, soybean prices seemed to have encountered some price resistance at the mid-$9/bu price… could this be a bottom?
Unfortunately, Chuck Penner, realist and founder of Leftfield Commodity Research, says the worst for not just soybeans, but also many other markets may still lie ahead, and it’s not necessarily because of trade spats and politics.
“When I look at the soybean chart, I’m looking at it where we’ve had a firmness in the nearby contact (for awhile),” says Penner. “And then we got to about beginning of February and that upward momentum hit resistance and we’ve working lower from there. My big concern isn’t so much the current situation (i.e. blocked canola trade) … but it’s that whole African swine fever (ASF) issue.”
Why? Penner says the devastating hog disease is giving China the luxury of shutting some of these imports down, because it simply doesn’t need the feed or product. This won’t be resolved in months or even years, Penner warns, and it may get worse before it gets better.
The best possible resolution on the trade side — where the U.S. and China come to some sort of agreement and Canada releases the Huawei executive — would solve many political issues, true, but Penner says that even after that, Chinese demand may not return, and could even slip further, if ASF continues or continues to spread.
Listen for more on this topic, including its impact on canola markets and — deep breath — possible even on feed wheat and corn markets below.