Grains trading outlook: corn, beans prices climb, wheat in the red ahead of US crop report

Corn prices continued climbing during early trade in Europe today, heading for a sixth straight session of gains ahead of the US Department of Agricultures weekly crop report. Beans were also higher, while wheat dropped, as Russian producers were seen selling in bulk, hedging against a possible geopolitical deterioration.

The US Department of Agricultures (USDA) statistical arm, the National Agricultural Statistics Service (NASS) will post its weekly readings on US crops. The log will cover the week through August 17, and will most likely reveal another seven days of steady and above-average progress for grains crops in the US. Last weeks report showed wheat, corn and beans were all developing better than expected, with crops mostly in good or excellent condition.

The standoff between Russia and the West continues to worry wheat traders on both sides, as risks over supply disruptions initially supported prices, before Russian producers started selling a lot, and cheap, to cover rising borrowing costs, which also result from the political confrontation.

“The situation with credit resource availability is critical in the [Russian] agriculture sector,” Andrey Oleynik, managing director of Russian company Basic Elements agribusiness, told Reuters. “All [of the Russian] agriculture sector is critically dependent on imported plant protection products, complex fertilizers and seeds.”

Agriculture consultancy IKAR said that Russia exported a record 3.1 million tons of grain in July, 24% higher than a year ago.

Wheat futures for September delivery on the Chicago Board of Trade (CBOT) traded at $5.466 per bushel at 9:18 GMT, down 0.82%. Wheat prices increased by ~0.7% last week, though still near a four-year low of $5.186 reached three weeks ago.

The USDA last week said global supplies of wheat at the end of the 2014-15 season will be at 192.96 million metric tons. The Department also lowered its season-average price projection by $0.3.

“People are talking now about a 60 million ton wheat crop. Theres no doubt the farmers will keep selling,” a European trader said for Reuters. “Russian wheat will stay cheap because theres plenty of it, they have the quality but they have no big chance to ask for better prices – theres too much.”

Meanwhile, the USDA’s monthly World Agricultural Supply and Demand Estimates Report (WASDE) was posted last week, revealing the Department’s view of record yields and harvests for wheat, corn and beans. Near-perfect US weather in the past three month, with three times the normal rainfall, spell a supply boom for grains in the US, pressuring prices some 15% lower this year.

Corn, beans

December corn on the CBOT stood at $3.794 per bushel, up 0.66%. The contract logged five straight sessions of gains last week, for a total increase of some 3.5%, though it also recorded the lowest price in four years at $3.480 per bushel.

“Were going to see corn in piles all over the Midwest, and its going to take forever to eat through it all,” Jamey Kohake, a commodities broker at Paragon Investments in Silver Lake, said for The Wall Street Journal. He projects that corn futures will fall as low as $3.20 a bushel through early October.

The USDA projected the corn harvest at the record 14.03 billion bushels, on yields of 167.4 bushels per acre, also at record level.

Beans futures for November were at $10.540 per bushel, up 0.19%. Beans prices declined ~2.5% last week, nearing another four-year trough at $10.690, reached earlier this month.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, wheat September future’s central pivot point on the CBOT stands at $5.469. The contract will see its first resistance level at $5.605. If breached, it will advance to $5.697 and then to $5.833 per bushel. The first support points is estimated at $5.377. Should it be broken, wheat will test $5.241 and after that $5.149 per bushel.

December corn’s central pivot is at $3.761. The future will have its first resistance at $3.805 and if it broken it will advance first to $3.841 and then to $3.885 per bushel. The first support level is calculated at $3.725. Should the contract breach that, it will probably continue down to $3.681. If both support levels are penetrated corn will test $3.645 per bushel.

Beans November future’s central pivot is projected at $10.561. The contract will have the front resistance level at $10.649. If it manages to pass the first level, next resistance is expected at $10.779 and then $10.867 per bushel. Meanwhile, support is expected at $10.431, $10.343 and $10.213 per bushel.