Trade War and Extreme Weather Push Grains DownThe trade war between the United States and China has no end in sight after the latest escalation as the U.S. called China as a currency manipulator and Beijing retaliated saying that they won’t purchase any agricultural product from the United States
Grains such as soybeans, wheat, and corn are trading down on Wednesday as investors are more focused on the ongoing trade war than in agricultural futures. Also, risk aversion is pushing money on gold, dollar, and other safe-haven assets.
The trade war between the United States and China has no end in sight after the latest escalation as the U.S. called China as a currency manipulator and Beijing retaliated saying that they won’t purchase any agricultural product from the United States.
Besides, the U.S. President is just adding gas to the fire. Trump twitted: “As they have learned in the last two years, our great American Farmers know that China will not be able to hurt them in that their President has stood with them and done what no other president would do – And I’ll do it again next year if necessary!”
However, experts believe that the trade relationship between the U.S. and China is already broken, and both countries will suffer even more and will have heavy stock losses. The recession is just ahead of us. So, both governments will be forced to talk.
On the other hand, extremely hot temperatures are expected in the U.S. south midwest, putting in danger early broths. Also, intense storms are happening in the east of the country; flood warnings are on play.
Soybeans down, but it remains in range
Soybeans are trading slightly down on Wednesday as investors are digesting extreme weather and the ongoing trade war. The grain is down for the third day, but honestly, the losses haven’t been significant, and the unit remains trading sideways between 8.425 and 8.540.
Technical conditions for soybeans remain weak, and in line of fundamental factors, the most natural outcome is for more declines in the short and long term.
The unit is currently trading at 8.445, 0.25% down on the day. The 8.400 area supports soybean, but the conditions suggest the break of that level in the short term. Then, August 5 low at 8.350 will be the next support.
To the upside, soybean needs a break above the 8,545 area. However, the resistance at 8.770 looks very strong.
Corn stops recovery and trades back below 4.000
Corn is trading negative for the second day as the unit is extending the retracement started on Tuesday at 4.045. After rejecting Tuesday’s highs, the asset sold back to test the 3.970 area yesterday and today.
Today, Corn prices are moving 0.30% down at 3.996. While technical conditions suggest more gains, the fundamental factors are pushing the price lower. Trade war and extreme weather are being the catalysts those days. Also, the chat pattern is inviting traders to go short.
That being said, the unit would see supports at the 3.900 area, then August 1 minimums at 3.830, and finally a return to the 3.680-3.750 range.
Wheat down below 4.800 again
Wheat is trading down for the second day on Wednesday with the pair giving up all the gains performed on Friday and Monday.
On Tuesday, the unit rejected 4.930, and it started a return below the 200-day moving average around 4.860. On Wednesday, Wheat is trading at 4.760, 0.96% negative on the day.
Technical conditions are mixed for the unit, but the chart pattern and fundamental factors are pushing wheat to the downside.
If the unit breaks below the 4.740 area, it will find next support at 4.700. Below there, check for 4.600 and 4.400 levels as buying zones.
To the upside, the unit needs to recover the 200-day moving average at 4.860. Then, a close above the 4.930 area is required. Finally, the 5.000 level will act as resistance and selling zone.