The highly anticipated meeting between President Donald Trump and China’s President Xi Jinping Saturday evening is what the market and trade watched this week. Mark Gold of Top Third Ag Marketing and Mike North of Commodity Risk Management Group say there are two potential outcomes of the meeting: the leaders could reach or deal, or they may not.
North calls it a game of deal or no deal. He says it’s simple – a deal would be good for soybeans, and no deal would create the opposite effect.
“If you've been watching the markets, the soybean market is certainly on point waiting for something,” said North. “As you've watched the trade in the past week up down up down, it is very nervous about what could or may not be said.”
North said the biggest impact will be on the soybean market, but both corn and wheat could follow soybean prices, as well. However, he doesn’t think those commodities will see as big of a price jump or drop.
So, just how big of a jump could the soybean market see if a deal is reached?
“I think you've got to look at a reaction of at least 40 to 60 cents fairly quickly to the upside,” said Gold. “I don't know how long that's going to last because we've missed a pretty good export window on this crop. With a 900 million carry out even if we started exporting again, there's only so much we can do here.”
Gold said a deal would definitely be good news, but there’s something specific he wants American farmers to not only watch, but act on.
“I think in the first day or two you need to take some action to protect those prices, get something sold new crop, get a little more advanced on old crop sales and take advantage of it,” said Gold.
“It's kind of the opposite of buy the rumor sell the fact ,” said North. “If you get the deal and it's a feel good for a moment and then the market settles back and says ‘OK, tell me more.’ The moment we start to think about all of the things weighing on prices, including the big carry outs, not to mention in advance progress in South America, we are basically up against things at play where I would say a rally may be unsustainable, whatever comes by the way of positive news.”