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Grains trading outlook: corn, wheat, soybeans futures extend slide, near 4-year lows

Corn, soybeans and wheat futures hovered near four-year lows during early trade in Europe today, after sliding on Monday, as investors prepare for increased harvest forecasts in the US.

Weather patterns project possible frosting in the northern Midwest and the North Plains later this week, threatening immature corn and soybeans crops. Plenty rains, however, will favor developing crops in the region. The South will see favorable planting conditions, though some more intense rains could locally disrupt activities.

Investors now eye the US Department of Agricultures (USDA) monthly World Agricultural Supply and Demand Estimates report on Thursday, set to confirm or upgrade earlier forecasts of record harvests in the US as well as record global surplus.

The key focus “will be any changes to U.S. corn and soybean yields” in the USDA’s report, Australia & New Zealand Banking Group Ltd. analysts including Paul Deane wrote in a note cited by Bloomberg. “Most market forecasts for U.S. yields are still above the USDA.”

Grain futures have dropped 15%-20% this year, as supply projections heavily outweighed demand prospects.

Meanwhile, USDA’s statistical arm, the National Agricultural Statistics Service (NASS) posted its weekly readings on US crop progress yesterday, spurring a slump across grains.

Corn

Corn futures for December delivery on the Chicago Board of Trade (CBOT) stood at $3.470 per bushel at 8:24 GMT, down 0.36%. The contract dropped 2.18% on Monday, after a ~2.2% loss last week, when a four-year low of $3.436 was reached.

Corn dropped sharply on Monday, as the NASS logged corn crops condition to be quite impressive as of September 7th, logging 74% in good or excellent condition, well above the 54% 5-year average for the reviewed week.

“Cooler forecast weather in the US Midwest has raised some concerns for ripening and drying time for the US corn crop,” Australia & New Zealand Banking Group Ltd. analysts wrote in an note cited by Bloomberg.

An incoming cooler Canadian system will reach the Corn Belt in the US by midweek, with temperature lows dropping to as little as 30 degrees Fahrenheit, -1.1 Celsius. The negative Celsius means water freeze, signifying possible frost threat to still immature crops.

Investors and farmers still expect an all time-high corn harvest this year, though, as near-perfect weather allowed for massive yields.

Soybeans, wheat

Soybeans futures for November were at $10.052 per bushel, down 0.32%. The contract lost 1.27% on Monday, after a four-year low of $10.022 was reached last week.

Meanwhile, December wheat traded at $5.300 per bushel, down 0.66%. The contract dropped 0.33% on Monday, after wheat prices slid by more than 5% last week.

NASS reported 72% of soybeans in good or excellent shape, while wheat crops in top condition slightly declined to 60% of the total. Meanwhile, 58% of wheat was harvested, well below the 78% completion rate average for the past five years.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, wheat December future’s central pivot point on the CBOT stands at $5.323. The contract will see its first resistance level at $5.403. If breached, it will advance to $5.473 and then to $5.553 per bushel. The first support points is estimated at $5.253. Should it be broken, wheat will test $5.173 and after that $5.103 per bushel.

December corn’s central pivot is at $3.508. The future will have its first resistance at $3.554 and if it broken it will advance first to $3.626 and then to $3.672 per bushel. The first support level is calculated at $3.436. Should the contract breach that, it will probably continue down to $3.390. If both support levels are penetrated corn will test $3.318 per bushel.

Soybeans November future’s central pivot is projected at $10.142. The contract will have the front resistance level at $10.222. If it manages to pass the first level, next resistance is expected at $10.360 and then $10.440 per bushel. Meanwhile, support is expected at $10.004, $9.924 and $9.786 per bushel.

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