- The latest US export inspections data had just a little impact on prices
- US spring wheat conditions marked a first rise this year
- August’s WASDE report is going to come in on Thursday
All major grains have been traded relatively low after making a wild increase earlier, a marginal rebound has taken place lately though. Bear in mind that the WASDE report presenting many fundamental metrics for grains is expected to come in on Thursday. Besides, there were a few noteworthy readings published on Monday which had rather an equivocal impact on prices.
Monday’s data regarding US export inspections exerted just a little impact on prices. There was a substantial bounce in case of soybean, in turn, a release for wheat proved to be stable. Nonetheless, taking account of a historical view there is rather a mixed outlook. There is seen a tiny improvement in case of soybean compared with the last year. In general, factoring in seasonal moves an increase of corn export could be expected before long. Source: Bloomberg
There was a first increase of spring wheat conditions this year reported on Monday. It could come from rainfall registered in one of the key area, however it has been insufficient to spark a more notable sell-off so far. What could be even more interesting, there are expectations suggesting a further reduction of wheat output at the end of the ongoing season. Source: Bloomberg
Harvest of wheat spring in the US has just begun. The process is likely to end late September. Given that there are soft conditions for wheat, a faster than usual beginning of harvest could not have an adverse effect on prices. Source: Bloomberg
In terms of soybean, expectations point to an increase both in export and inspections. In spite of the fact that the situation is not so well as it was in the same period last year, better prospects coming from China could result in a higher demand going forward. Source: Bloomberg
Weekly changes in wheat export do not look encouragingly. A moving average has lowered while prospects have deteriorated of late. Nevertheless, buyers could still count on a lowering of outlook for output and stocks which potentially might buoy prices. Moreover, a rise in case of export prospects could take place as well given some production issues seen across Europe. On the other hand, out-turn prospects in Russia are uninterruptedly improving. Source: Bloomberg
Key WASDE report imminent
The key WASDE report will be revealed as soon as tomorrow. As it was presented at the chart below, there are expectations suggesting a meaningful deterioration of production and stocks prospects for all major grains. If so, it could be a boost for lately beleaguered grains (wheat, corn and soybean), on the other hand it creates a risk of disillusion if prints prove to be sub-par.
Since the beginning of this week the price has tried to rebound but it has failed thus far. It’s worth mentioning that along with slipping prices there is getting lower volume. If it’s not just a seasonal theme, it could be a potential tipping point, particularly as we take into account that volume could pick up when the WASDE report is released. A 38.2% retracement placed nearby a long-term trend line remains a relevant support for buyers.
Soybean prices have already closed a bullish gap and it seems that a move towards a support located at 950c per bushel cannot be ruled out. However, if the price is able to stay above that level, it could lead to an upward move even above 1000c per bushel. It’s especially true when a seasonal increase in a demand is expected. On the other hand, some sellers could lurk nearby a 61.8% retracement of a recent big rising leg.
Looking at the wheat chart one could say that ’history repeats itself’. We had similar price behavior which took place in 2015. The price has fallen after it failed to break 460c per bushel. In addition, there has been a meaningful decrease in volume which could suggest a rebound. Having said that, if the last year’s scenario is to repeat, an area of 490/500c per bushel could constitute a ceiling for buyers.