Grain Prices Slump Following USDA Report
Fundamentals
You have to hand it to U.S. grain producers, who just a few years ago suffered through one of the worst droughts in recent memory, but are now poised to produce record or near record crops this season. The USDA, in its June crop production and supply/demand report, estimated 2014-15 U.S. Corn production of 13.935 billion bushels. This would surpass the previous record of 13.925 billion bushels and help to elevate tight supplies seen this past year due to better than expected export demand. A record U.S. Corn crop combined with an expected rise in global Corn supplies to 182.7 million metric tons is expected to raise U.S. Corn carryover totals to a rather bearish 1.726 billion bushels in the 2014-15 marketing year vs. 1.146 billion bushels in the 2013-14 season.? ?
Expectations for this year?s Soybean crop were also impressive, with the USDA estimating U.S. production at a record 3.635 billion bushels.? This should allow 2014-15 Soybean carryover rebound from a very tight 125 million bushels this season, to a more comfortable 325 million bushels in the 2014-15 crop year. Global soybean production is projected to swell to nearly 300 million tons, with a projected 2014-15 carryout of 82.88 million tons. It appears that the prospects for a bumper crop are solid given the near-ideal weather condition for most of the Midwest.? However we should still remember that Mother Nature can be moody at times and it is still very early in the production cycle to declare the crops ?made?. However, barring any major changes in weather forecasts or export demand, grain bears and livestock producers should be licking their chops at the prospects for potentially lower Corn and Soybean prices in the coming months.
Technical Notes? -? View Today’s Chart
Looking at the daily chart for November Soybeans we notice what has turned into a ?bull trap? back in late May, when the market attempted an upside breakout from the recent consolidation pattern. However the upside momentum failed to hold and prices have now trudged back into the recent 50-cent wide price band. Prices are holding above the 200-day moving average (MA) but remain just below the shorter term 20-day MA. Momentum is beginning to favor the bear camp with the 14-day RSI reading 43.58. 1201.25 is seen as the next support level for November Soybeans, with resistance found at 1257.25.
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