Commodities look for bullish catalysts

●Soybeans and other grains got hammered by tariff wars

●In mid-December soybean futures were around 14% below their late-May price levels


The crude oil rally—and collapse—was the commodity story in 2018, and given it (literally) fuels the global economy and is the world’s most actively traded commodity future, there’s no reason oil shouldn't make more headlines in 2019.

But one other area traders may want to keep an eye on is grains—wheat, corn, and soybeans. These markets—especially soybeans—got hit hard over the summer because of the US-China tariff wars. China slapped heavy duties on US soybeans in retaliation for US tariffs on Chinese goods, and from late May to mid-September, soybean futures dropped around 22% to $8.14/bushel.

May soybean futures (ZSK9), 4/22/18–12/17/18. May 2019 soybean futures price chart. Soybeans in tariff crosshairs.

Source: OptionsHouse

Prices subsequently rebounded, as China reportedly agreed to resume buying American soybeans after the December 1 US–China trade summit, but it’s still unclear whether these purchases represent more than a token effort, or whether they’ll be discontinued if the US–China trade relationship takes another negative turn.

But if a real trade truce is hammered out, soybeans and other grains could get a boost.

Market closure alert: US stock markets close early today (1 p.m. ET).


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