Grains trading outlook: beans and wheat decline ahead of US crop report, corn higher

Grains prices were mixed during midday trade in Europe today, as investors await the US weekly crop report. Wheat logged sizable gains last week, not least because of growing geopolitical tensions over Ukraine.

Weather patterns called for a relatively favorable trend for the Midwest, with scattered showers and lower temperatures, but also dryness and the threat of early frosting. The Plains will also see generally friendly weather, with some heat stress concerns in the south and frost potential in the north. Europe has been subject to damaging rainfall throughout the whole harvest season this year, with rains continuing through central Europe, damaging wheat quality and delaying harvest.

The US Department of Agricultures statistical arm, the National Agricultural Statistics Service (NASS) will post its weekly crop progress log tomorrow, which will report on the development and quality of growing crops in the US for the week through August 10. Last weeks report, which covered the seven days through August 3, revealed wheat, beans and corn crops were all still in very good shape.

Wheat futures for September delivery on the Chicago Board of Trade (CBOT) stood at $5.454 per bushel at 12:07 GMT, down 0.68%. The contract added about 2.5% last week.

World stockpiles will rise to a three-year high of 190.81 million metric tons before the 2015 Northern Hemisphere harvest, according to a Bloomberg News survey.

However, there are concerns that the geopolitical crisis over Ukraine will hurt Black Sea exports, some 20% of total exports. Russia imposed an imports ban of food products to western producers last week. The deepening of the confrontation helped wheat advance last week, despite improving US crop outlooks.

Last weeks NASS report pointed that spring wheat was still in top-notch condition, with 70% of crops reported in good or excellent condition. Meanwhile, winter wheat harvest was 90% complete, well ahead of the 85% average for the past five years.

“Fundamentally, the market’s still bearish,” Donald Selkin, Chief Market Strategist at National Securities Corp. in New York, which oversees $3 billion, said for Bloomberg on August 8. “There really haven’t been any disruptions of grain exports from the Black Sea area. We’re in the heart of corn and soybean season. If those go along well, you could get additional downside pressure from the whole grain area.”

Corn, soybeans

Corn for December traded at $3.644 per bushel, up 0.28%. Corn gained some 0.5% last week.

The log from last week showed corn crops had scored slightly lower in terms of condition, but still 73% were reported in good or excellent condition, well above the 62% for the same week of last year.

Meanwhile, November beans stood for a 0.09% drop at $10.836 per bushel. Beans closed last week about 2.5% higher.

NASS’ report revealed beans were still looking quite well, with 71% of crops in good or excellent shape.

“This month is very critical for soybean yields,” Avtar Sandu, senior commodities manager at Phillip Futures Pte, said for Bloomberg. “A little bit of weather change spooks the market.”

Technical support and resistance levels

According to Binary Tribune’s daily analysis, wheat September future’s central pivot point on the CBOT stands at $5.525. The contract will see its first resistance level at $5.581. If breached, it will advance to $5.669 and then to $5.725 per bushel. The first support points is estimated at $5.437. Should it be broken, wheat will test $5.381 and after that $5.293 per bushel.

December corn’s central pivot is at $3.658. The future will have its first resistance at $3.686 and if it broken it will advance first to $3.738 and then to $3.766 per bushel. The first support level is calculated at $3.606. Should the contract breach that, it will probably continue down to $3.578. If both support levels are penetrated corn will test $3.526 per bushel.

Beans November future’s central pivot is projected at $10.804. The contract will have the front resistance level at $10.892. If it manages to pass the first level, next resistance is expected at $10.938 and then $11.026 per bushel. Meanwhile, support is expected at $10.758, $10.670 and $10.624 per bushel.