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It Is All About China, When It Comes to Commodity Prices This Year

You can expect commodity prices to pretty much repeat those of 2018, that is, until such influences as the current trade war are settled, observed a 44-year veteran of commodity trading and marketing columnist for Successful Farming magazine.

Speaking at the 2019 Commodity Classic, Al Kluis identified four key fundamentals that will influence commodity prices this year. Those fundamentals include:

  1. Will a trade deal with China get done?
  2. What will happen to the weather and crop size in South America?
  3. What will be the U.S. corn and soybean acreage mix?
  4. What will happen to the weather and crop size?

Kluis stressed that a securing a trade deal with China is paramount to determining commodity values in 2019, particularly regarding soybean prices. 

“China must put together a trade deal because if they don’t, they are going to have a lot more economic problems than we do,” he observed.

And U.S. farmers must have a trade agreement in the near future to start building profitability in soybeans.

He warned, however, that securing a trade agreement doesn’t necessarily mean a return to the steady growth in demand for soybeans that had been occurring in the past from China. “You know, China’s economy is slowing. And they have serious problems with debt. In fact, I doubt they know how much debt they have,” Kluis pointed out. “That is going to influence their demand for soybeans in the future.”

Kluis observed that in the short term, however, soybean prices have reached a bottom and will begin to climb as the year progresses. “As the Chinese stock market begins to turn up and their economy improves, it’s good news for global soybean producers.”

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