Markets Strengthen, Pricing in Worst Trade News: What’s Needed to Continue The Rally?

Bryan Doherty, Total Farm Marketing, says the way the markets shook off the escalating trade war with China was impressive but it will take several factors converging to keep the momentum going.

Grain and livestock finish higher Friday.

For the week all the commodities were higher except cattle after a volatile week of trade tied to tariff and trade headlines.

Bryan Doherty, Total Farm Marketing, says the markets shook off the escalating trade war with China and their tariff tit for tat as China raised tariff levels from 84% to 125% on U.S. imports starting April 12.

He thinks most of the most bearish tariff news has been priced into the commodity and outside markets and traders are now looking ahead with more optimism about strike trade deals with countries around the globe, even with China.

China also bought over 40 cargoes of Brazil soybeans this week which ended up raising their basis levels and they are now 60 to 80 cents above U.S. prices, so the U.S. could pick up business from other countries.

The large break in the dollar will certainly offset the impact of tariffs.

Doherty says the reaction was impressive but to build on that momentum next week the trade is going to need continued progress to be made by the administration in the way of new deals.

Corn made new highs for the move and May corn was up $.30 for the week.

Most contracts are closing in on $5 and areikely to reach that mark, says Doherty, after closing above several major moving averages.

He also thinks $11 soybeans are in the cards.

Cattle futures rebounded on Friday despite lower cash trade at mostly $204 in the South and $208/$328 in the North.

Doherty says as long as the stock market continues to recover the cattle market the long speculator will continue to hold that position.

Milk futures were higher for the week but have been less inspired by the trade optimism in other commodity markets.

Doherty says he thinks production has not declined enough, nor has demand improved enough, for the market to get its confidence back in the milk markets.

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