Wheat leads grains

Brazilian farmers will grow slightly less soy in the 2013-14 season than previously estimated, as rains and pests limited productivity at the end of the harvest, crop agency Conab said Thursday.

Brazil will likely close the season with an 85.7 million-ton soybean crop, Conab said, up 5.1% from the previous crop. The estimate was just less than Conab's July forecast of 86.3 million tons.

Virtually all of the crop has already been harvested in the South American country, the world's No. 2 soybean grower after the United States.

Conab slightly raised its estimate for Brazil's corn crop Thursday to 78.6 million tons from 78.2 million tons, the agency said. The corn harvest, which should wind up this month, is now seen shrinking 3.6% from the previous 2012-13 season.

 

WHEAT  (CBOT:ZWU14)

Wheat prices were higher and rallied once again on the rains that keep falling in Europe and tensions keep rising along the Ukraine-Russia border. Too much rain in Western Europe and other reports that the Wheat crop there is losing quality and could grade feed have provided the best support for futures markets in the US, but increasing tensions in Eastern Europe that could disrupt Russian and Ukrainian exports are important too. The biggest weather problems are in France and Germany, and they are also the biggest producers there. Ukraine said this week that recent rains might hurt its quality on part of its crop as well. Demand for U.S. Wheat could improve if the world needs more high quality Wheat and the EU crop loses more quality. There are still down side price pressures from Russia, and ideas are that Ukraine will need to sell soon. Russian crops are said to be very big and of very good quality. Spring Wheat crops in Europe and Russia appear good, and condicitons are reported to be good for harvesting Winter Wheat. Spring crops in the US and Canada appear very good, although parts of Canada have seen some losses from too much rain earlier in the year The charts show that Wheat prices are possibly making a bottom. 

Overnight News: The southern Great Plains should see isolated to scattered showers, especially on Saturday and Monday. Temperatures should average near to above normal. Northern areas should get isolated to scattered showers Saturday and Monday. Temperatures should average near to above normal. The Canadian Prairies should get dry weather after some showers today. Temperatures will be near to mostly above normal.  

Chart Analysis: Trends in Chicago are up with objectives of 583 September. Support is at 561, 553, and 543 September, with resistance at 572, 581, and 584 September. Trends in Kansas City are up with objectives of 670 September. Support is at 645, 631, and 620 September, with resistance at 662, 667, and 681 September. Trends in Minneapolis are up with no objectives. Support is at 634, 631, and 618 September, and resistance is at 651, 663, and 675 September.

 

CORN (CBOT:ZCU14) AND OATS  

The market moved higher along with Wheat and Soybeans as speculators covered short positions before the export sales report this morning and the USDA production reports on Tuesday. The U.S. crop remains in very good condition, although many areas could use some rain. Rains are falling or are in the forecast for later this week, and many áreas will get some very beneficial precipitation. Most private production estimates are well above 14.09 billion bushels for US Corn, although USDA could reléase a more conservative estimate until it has further data from additional surveys. Meanwhile, it continues to rain in Europe, and Wheat crops from Germany to France are starting to be downgraded in terms of quality. That means more feed grains will be available to a market that looks to have plenty available in the coming year. Demand looks to weaken this year as China looks to have a very big Corn crop of its own and Europe will probably use more Wheat instead of Corn. The charts now give targets as low as from $3.35 to $3.30 basis September, although selling might be limited until the reports are released next week. 

Chart Analysis: Trends in Corn are mixed. Support is at 358, 352, and 348 September, and resistance is at 369, 372, and 375 September. Trends in Oats are up with opbjectives of 386 and 416 September. Support is at 356, 350, and 343 Sepember, and resistance is at 373, 380, and 384 September.

 

SOYBEANS (CBOT:ZSU14)

Futures markets in Chicago moved higher on what appeared to be speculative short covering before the USDA esport sales report today and the first USDA production reports on Tuesday. Ideas of big production continue and many private estimates are well above 3.8 billion bushels. However, USDA might be more conservative with its yield and production estimate until it has more data to work with from coming surveys. The crops could definitely use some rain, but color is good and the potential for a big production exists as long as August rains are good. Rains have been falling or are in the forecast for this week, and conditions should be improving in many areas. Production ideas remain extremely high in part due to the strong crop condition ratings reported by USDA each Monday and in part on the very high planted area estimate released by USDA in June, and much of these high estimates seem justified at this time. The trade senses no real problems for now and charts patterns are weak. 

Overnight News: USDA said that unknown destinations bought 113,000 tons of Soybeans. 

Chart Analysis: Trends in Soybeans are mixed to down with objectives of 960 September. Support is at 1078, 1060, and 1048 September, and resistance is at 1101, 1120, and 1134 September. Trends in Soybean Meal are mixed to down with objectives of 338.00 and 316.00 September. Support is at 354.00, 351.00, and 348.00 August, and resistance is at 365.00, 370.00, and 374.00 August. Trends in Soybean Oil are mixed to down with objectives of 3460 and 3330 September. Support is at 3550, 3520, and 3490 September, with resistance at 3620, 3665, and 3720 September.

   

RICE

Prices were lower after another day of quiet trading. The Texas harvest is starting, although it is too early to get any accurate yields. Bids in cash markets have been stable, but there are not a lot of them around. The crop there looks good and should feature good quality.. Growing conditions seem mostly good, but the crop remains a little behind normal progress due to cooler than normal temperatures. USDA shows the crop to have average progress, although producers say progress is a week or two behind. Everyone says that quality is good and should be much better than in recent years. Asian prices continue to trade sideways or move higher over time, with Vietnam exporting less and Thai prices very competitive with those of other Asian countries. India rainfall totals remain behind normal, and planted área has declined. 

Overnight News: Some showers are posible late in the week and through the weekend. Temperatures will average near to below normal. Iraq has tendered for 30,000 tons of optional origin Rice. 

Chart Analysis: Trends are down with objectives of 1240 and 1187 September. Support is at 1252, 1240, and 1228 September, with resistance at 1279, 1284, and 1298 September.


CANOLA AND PALM OIL

Canola was higher on reports of strong cash markets and on the price action in Chicago. Overall chart patterns are mixed as the weather has generally improved in Canada. Farmers are reported to be light volume sellers, and end users were looking to extend coverage. Traders still expect a smaller crop this year than had originally been anticipated, but recent better weather has increased some production ideas from the lowest estimates seen a month ago. Palm Oil closed mostly a little higher. The weather feaures showers in Malaysia and showers and storms in Indonesia. However, the rains and coverage have not been uniform and some production losses are anticipated in both countries. The weakness in competing vegetable oils should keep rally attempts to a mínimum. MPOB data will be out soon, and traders expect good demand and less production to produe lower stocks near 1.45 million tons. The stocks levels would be at three year lows.

Chart Analysis: Trends in Canola are mixed. Support is at 432.00, 429.00, and 426.00 November, with resistance at 445.00, 449.00, and 455.00 November. Trends in Palm Oil are mixed. Support is at 2240, 2210, and 2180 October, with resistance at 2280, 2290, and 2320 October.

 

DAIRY

U.S. dairy prices were mostly near unchanged, but Mil kwas a little higher. Futures still remain strong but have beengoing through a correction phase for the last week. Domestic and export demand for Milk and products has held together well nd remains solid. Fluid Milk availability has dropped, but this is a seasonal thing and to be expected. Production is a little better than expected in the Midwest and Notheast due to recent rains. It appears that processors covered most needs and now can let the market come to them. Cash Cheese and Buter prices have turned mixed after recent big rallies. Dry markets are steady to mixed.

Chart Analysis: Trends in Milk are mixed to up with no objectives. Support is at 2125, 2100, and 2070 September, and resistance is at 2190, 2210, and 2220 September. Trends in Cheese are mixed to up with no objectives. Support is at 203.00, 202.00, and 200.00 September, with resistance at 207.00, 210.00, and 212.00 September. Trends in Butter are mixed to up with no objectives. Support is at 231.00, 229.00, and 226.00 September, and resistance is at 236.00, 241.00, and 244.00 September.

About the Author
Jack Scoville

Jack Scoville is a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.

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