Grains trading outlook: corn, wheat, soybeans futures drop on quality US crops

Wheat, corn and soybeans futures were all lower during early trade in Europe today, as investors priced in the latest report, showing very good crop quality across all grains grown in the US, adding to bearish sentiment from forecasts of record-high harvests.

Weather models project scattered showers across the Midwest and Northern Plains this week, supporting growing crops. Some cool is forecast later on, however, which could slow developing crops, while possible frosting in the Canadian prairies could hurt crops more significantly there. The Southern Plains will also see favorable rains, though only scattered, before some possible heat stress late in the week.

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 31, revealed steady progress and overall good condition for developing crops, reaffirming USDA’s projection for record crops across all grains this year.

Corn

Corn futures for December delivery on the Chicago Board of Trade (CBOT) stood at $3.604 per bushel at 8:31 GMT, down 0.89% and near a four-year low.

Tuesdays NASS report pointed a still impeccable corn crop condition, with 74% of acreage said to be in good or excellent condition.

“With this further improvement in the crop condition and the market expectation of further yield increases for both commodities in the upcoming monthly USDA report, the outlook remains particularly bearish for soybeans and corn,” Sam Sloane, a senior analyst for risk management and advisory at Ikon Commodities Pty in Sydney, said for Bloomberg.

Last Month 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.

Soybeans, wheat

Soybeans futures for November were at $10.216 per bushel, down 0.99%, also near a four-year low. Beans prices were down ~12% last week.

Meanwhile, September wheat traded at $5.396 per bushel, down 0.69%. Wheat prices added ~3% last week.

“Yield reports out of North Dakota, South Dakota and Canada continue to be very good for spring wheat,” Alan Kluis, the president of Kluis Commodities in Wayzata, Minnesota, said for Bloombeg. “They need to get drier up there.”

NASS’ log put spring wheat crop condition at predominantly good, with 63% of crops reported to be in good or excellent shape. Meanwhile, 38% of acreage was already harvested, which is well-below the 5-year average figure of 65% harvest completion for the same week.

The USDA said last 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.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, wheat September future’s central pivot point on the CBOT stands at $5.448. The contract will see its first resistance level at $5.510. If breached, it will advance to $5.586 and then to $5.648 per bushel. The first support points is estimated at $5.372. Should it be broken, wheat will test $5.310 and after that $5.234 per bushel.

December corn’s central pivot is at $3.644. The future will have its first resistance at $3.666 and if it broken it will advance first to $3.696 and then to $3.718 per bushel. The first support level is calculated at $3.614. Should the contract breach that, it will probably continue down to $3.592. If both support levels are penetrated corn will test $3.562 per bushel.

Beans November future’s central pivot is projected at $10.301. The contract will have the front resistance level at $10.399. If it manages to pass the first level, next resistance is expected at $10.479 and then $10.577 per bushel. Meanwhile, support is expected at $10.221, $10.123 and $10.043 per bushel.