Grains Weak Amid China-US Trade War, Crop, Weather Conditions

While the situation is somehow in line with the expectations, July and the starting of August has been a period of no advancement in crop conditions.
Mauricio Carrillo
Grains Weak Amid China-US Trade War, Crop, Weather Conditions
Grains Weak Amid China-US Trade War, Crop, Weather Conditions

Agricultural futures are trading slightly weak on Tuesday as investors are digesting political and crop news.

First, the trade war escalation in the last days is pushing more pressure to a sector which is already depressed. No matter what U.S. President Donald Trump says about money coming to America, farmers are on a very delicate position.

Nobody really wins in a trade war… but farmers are in the ICU.

Crop conditions remain below average

Also, weak crop conditions were reported by the latest report released by the USDA.

Soybean in the United States was rated 54% good or excellent, the same as the last week. Also, the soybean crop is blooming by 72%, well below the 87% of average by this time in the previous five years.

Corn condition was rated at 57% good to excellent, an unexpected drop from 58% a week ago. 78% of corn crop was in the silk stage, well below the 93% five-year average.

Finally, Spring wheat crop was rated 73% good to excellent, unchanged from the previous week. America’s winter wheat harvest is 82% done, ten percentual points below the 92% completed at this time in the last five years.

Long story short, while the situation is somehow in line with the expectations, July and the starting of August has been a period of no advancement in crop conditions.

Soybeans positive but on consolidation mood

Price of Soybeans daily chart August 6

Soybean is trading positive on Tuesday as the grain is consolidating levels around 8.500 after performing a bouncing from 8.350 on Monday.

Technical conditions are suggesting that a possible recovery can be on the way, but the grain should first break above the 8.600 area to make it possible.

Above 8.600, soybean will find next resistance at 8.777, where a confluence of 20, 50, and 200 days moving averages is located.

To the downside, 8.400 and 8.350 are the levels to watch. Below there, please see the 8.100 area and the 7.800 critical frontiers.

Corn pauses its recovery at 4.030

Prices of corn daily chart August 6

Corn is trading down on Tuesday after performing two positive sessions in a row. In that way, corn is pausing at 4.030 its recovery from August 1 low of 3.830, high that has been tested on Monday and Today’s sessions.

Currently, corn is trading 3.988, 0.75% negative on the day. Technical conditions suggest that the uptrend remains intact. However, its stamina is fading. To the upside, the unit needs to clear up the mentioned 4.030 first, then 4.060 and 4.200 are the levels to watch.

To the downside, 3.830 is the first support. Then, watch for 3.750 and 3.680 as the levels to focus.

Wheat consolidates levels above 4.860

Price of wheat August 6 daily chart

Wheat is trading down on Tuesday, but the move answers to consolidation from the last two sessions positive outcome.

On Tuesday, wheat jumped to 4.930 earlier in the day, but the unit was unable to extend gains beyond that point. Then, the commodity traded down, but always above the 200-day moving average at 4.860, level which is acting as support.

Currently, wheat is trading at 4.878, 0.65% negative in the day. Technical conditions show more room for the upside; however, fundamental factors are containing the grain.

To the upside, the 20-day moving average at 4.950, the 50-day MA at 5.060, and the 5.100 are the levels to watch. While in the bearish point of view, check the 4.860 as the first support. Then, 4.800 and 4.700.

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