Grains Resume Downtrend Amid Trade War, Weather

Grains as soybeans, corn, and wheat have opened the week with losses after the USD/CNY broke the 7.000 level for the first time in a decade as China let it do it as a retaliation for the latest president Donald Trump tariffs measures.
Mauricio Carrillo
Grains Resume Downtrend Amid Trade War, Weather
Grains Resume Downtrend Amid Trade War, Weather

Agricultural futures are trading down on Monday as investors are digesting escalating Washington-Beijing trade war and what it looks like a point of no return from lost confidence.

Grains as soybeans, corn, and wheat have opened the week with losses after the USD/CNY broke the 7.000 level for the first time in a decade as China let it do it as a retaliation for the latest president Donald Trump tariffs measures.

Risk aversion is the topic of the day as investors are considering that China abandoned any hope for a trade deal with the U.S.

“The U.S.-China trade war, but also picture-perfect weather in the U.S., have traders thinking that yields may make up for any lower acres,” Ole Houe, director of advisory services at IKON Commodities said in a recent report.

Weather in the U.S. midwest is giving some room to farmers; however, thunderstorms are expected in the next days.

Finally, grains traders are also waiting for the USDA acres and crop conditions comprehensive report that will be published next week.

Soybeans trade at 2-month lows

Prices of soybeans Daily chart August 5

Soybeans are trading down on Monday as investors are digesting escalating trading war between the U.S. and China. The unit broke below the 8.400 support and fell to its lowest level since May 28 at 8.350.

Currently, the oilseed is trading at 8.405, 0.95% down on the day. Technical conditions remain depressed for the grain with the 8.350 level as immediate support.

Below there, 8.040 and 7.800 are the supports.

Another point that supports bearish point of view for soybeans is that the CoT report released by the Commodity Futures Trading Commission showed that traders are increasing its bearish positions in the grain as net-short positions rose to 55,160 from 42,656 in the previous week.

Corn down on Monday but off lows

Prices of Corn August 5 daily chart

Corn opened the week with losses amid risk aversion and ongoing trade war. However, the grain managed to recover ground from lows of the day at 3.870, and it is now trading at 3.925, 0.60% negative on the session.

The CoT report showed that long speculators cut their net long positions, betting on more declines in the maize. Long positions declined to 105,907 in the week ending on July 30 from the 143,540 in the previous period.

Corn is now trading in consolidation mode, but technical conditions remain depressed. However, some revival is showing up. Range frontiers are 3.875 and 3.975.

Wheat recovers ground from lows, but still negative on Monday

Prices of wheat daily chart August 5

Wheat declined on Monday to trade as low as 4.765 earlier in the day. However, it managed to recover ground, and it is now pricing 0.43% negative at 4.847.

The 200-day moving average now traps the unit at 4.860. Technical conditions are showing that the odds are changing a recovery in wheat to the 5.000 area in possible in the short and middle term.

However, watch the 4.700 area as the downside is still in play.

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