Grains trading outlook: soybeans at four-year low; wheat, corn lower

Wheat, corn and soybeans futures were lower during midday trade in Europe today, as traders priced in the latest bearish US crop report, which reaffirmed the very good crop condition across all grains.

Weather patterns call for heavy rains in the Midwest this week, which is largely beneficial for growing crops, though some localized flooding is possible. A cooler trend, however, is making its way from the North, and could be stressing crops along the northern reaches of the belt later this week. The Plains will see quite a few rains, which will ease crops in the South, though also cause some flooding in the North. The increased rainfall also impedes the ongoing spring wheat harvest, and could spell lower crop quality, though they also generally favor filling corn and soybeans.

Near-perfect US weather in the past three month, with three times the normal rainfall, created conditions for a supply boom for corn, beans and wheat 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 24, revealed steady progress and overall good condition for developing crops, reaffirming USDA’s projection for record crops across all grains this year.

“Crops are developing quite well, which is keeping any rally in those markets pretty subdued,” Graydon Chong, an analyst at Rabobank International, said for Bloomberg. “We really do need a big supply-side shock to see markets have a sustained rally.”

Wheat

Wheat futures for September delivery on the Chicago Board of Trade (CBOT) traded at $5.406 per bushel at 11:03 GMT, down 0.32%. Wheat prices declined by ~0.8% last week.

“If you look at the price of U.S. wheat it is still uncompetitive as compared with European wheat,” Ole Houe, an analyst at Sydney-based brokerage IKON Commodities, said for Reuters. “I think it is unlikely to get lot of support because of the rain [threatening crop quality], it might be for the near term.”

NASS’ log put spring wheat crop condition at predominantly good, with 66% of crops reported to be in good or excellent shape. Meanwhile, 27% of acreage was already harvested, which is well-below the 5-year average figure of 49% harvest completion for the same week.

The USDA said earlier this month, that global supplies of wheat at the end of the 2014-15 season will be at the record 192.96 million metric tons.

Meanwhile, Russian and Ukrainian producers have been selling a lot, adding 24% on an annual basis to exported volumes in July, as the political standoff in Eastern Europe threatened returns for growers in the region.

Corn, Soybeans

December corn on the CBOT stood at $3.672 per bushel, down 0.07%. Corn closed last week about 0.6% lower.

Monday’s report pointed a still impeccable corn crop condition, with 73% of acreage said to be in good or excellent condition.

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

Meanwhile, soybeans futures for November were at $10.432 per bushel, up 0.51%, having reached a four-year low of $10.240 earlier in the day. Beans prices were down ~3% as trading closed last week.

Soybeans crop’ condition was reported to have improved last week, with 70% 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 $5.457. The contract will see its first resistance level at $5.509. If breached, it will advance to $5.595 and then to $5.647 per bushel. The first support points is estimated at $5.371. Should it be broken, wheat will test $5.319 and after that $5.233 per bushel.

December corn’s central pivot is at $3.677. The future will have its first resistance at $3.699 and if it broken it will advance first to $3.725 and then to $3.747 per bushel. The first support level is calculated at $3.651. Should the contract breach that, it will probably continue down to $3.629. If both support levels are penetrated corn will test $3.603 per bushel.

Beans November future’s central pivot is projected at $10.307. The contract will have the front resistance level at $10.355. If it manages to pass the first level, next resistance is expected at $10.417 and then $10.465 per bushel. Meanwhile, support is expected at $10.245, $10.197 and $10.135 per bushel.