Grains trading outlook: wheat, corn, beans prices decline after US crop report

Grain futures were on the downside during early trade in Europe today, as markets price in the latest report on US crops, in light of projections for record harvests this year.

Weather patterns call for scattered showers and warm-to-hot weather for the Midwest and Northern Plains, favoring developing corn and soybeans this week. The Southern Plains will see hot weather and fewer showers, putting pressure on crops. Early next week, however, a cooler and more rainy system will track through most of the eastern US, which will ease Southern Plains crops and might stress some areas in the north.

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 grains prices some 15% lower this year.

The US Department of Agriculture’s (USDA) statistical arm, the National Agricultural Statistics Service (NASS), posted its weekly readings on US crops yesterday. The log, which covers the seven days through August 17, revealed steady progress and overall good condition for developing crops, reaffirming USDAs projection for record crops across all grains this year.

Wheat

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.

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

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 $5.380 per bushel at 8:11 GMT, down 0.83%. The contract dropped 1.59% on Monday, turning back towards a four-year low of $5.186 reached three weeks ago.

NASS log put spring wheat crop condition at predominantly good, with 68% of crops reported to be in good or excellent shape. Meanwhile, 17% of acreage was already harvested, which is well-below the 5-year average figure of 33% harvest completion for the same week.

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.

Corn

December corn on the CBOT stood at $3.682 per bushel, down 0.87%. The contract lost 1.46% on Monday, ending a series of five straight sessions of gains.

Mondays report pointed a still impeccable corn crop condition, with 72% of acreage said to be in good or excellent condition.

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.

“We’re going to see corn in piles all over the Midwest, and it’s 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.

Soybeans

Beans futures for November were at $10.522 per bushel, down 0.52%. Beans prices added 0.5% on Monday, after a ~2.5% decline last week.

Soybeans crop condition was reported to have improved last week, with 71% of crops in good or excellent condition.

The USDA estimated this season’s beans harvest would be a record 3.82 billion bushels, on record yields of 45.4 bushels an acre.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, wheat September future’s central pivot point on the CBOT stands at $5.447. The contract will see its first resistance level at $5.491. If breached, it will advance to $5.557 and then to $5.601 per bushel. The first support points is estimated at $5.381. Should it be broken, wheat will test $5.337 and after that $5.271 per bushel.

December corn’s central pivot is at $3.743. The future will have its first resistance at $3.781 and if it broken it will advance first to $3.847 and then to $3.885 per bushel. The first support level is calculated at $3.677. Should the contract breach that, it will probably continue down to $3.639. If both support levels are penetrated corn will test $3.573 per bushel.

Beans November future’s central pivot is projected at $10.545. The contract will have the front resistance level at $10.631. If it manages to pass the first level, next resistance is expected at $10.685 and then $10.771 per bushel. Meanwhile, support is expected at $10.491, $10.405 and $10.351 per bushel.