Wheat
Wheat futures prices pressured consecutively this past week, as a result of USDA’s updated crop stocks report. On the other note, despite the perfect conditions for good harvest, Ukraine news recently reported that Ukraine may temporarily limit wheat export at the end of November. Wheat exporting from Russia is also slowing, as high domestic prices are making exporting less profitable. Furthermore, Russian prime minister said that they need more time to determine forecasts. He explained that the current harvest forecast is unclear, and that they need another two weeks or three to see whether or not they can expect good winter crops, and decide if they are going to expend their wheat sales.
In general, I predict the wheat future prices to increase slightly, but remain moderately low in the coming week.
Corn
Corn future prices remained low during the week, but spiked on Friday (Nov.16th) due to the U.S. Environmental Protection Agency (EPA) declined the request to relax its requirement on corn ethanol use in gasoline. Officials said that although it’s recognized that earlier drought has made the current situation difficult, particularly for livestock producers, analysis shows that the requirements for a waiver have not been met, and a suspension is unlikely to have an impact on corn, food or fuel prices. This rejection results in a steep decline in the U.S.’ corn production, and corn future prices are likely to remain high for the next while. On the other hand, China, the world’s largest corn consumer, is expecting to harvest 201 million tons of corn this year, which is 4.1% higher compared to last year. This could mean a decrease in importing demand from China.
Looking at the analytical chart pattern, corn future prices are highly likely to drop to offset the rapid price spike from Friday (Nov 16th). However, I doubt that the prices are going to drop to as low as $712.00 as I anticipate the corn future prices to stay relatives high for the upcoming week.
Soybean
Soybean future prices spiked briefly for 2 days last week, but prices further dropped for the most part. Soybean future prices are currently at 5 months low, largely due to China’s cancelled orders on the U.S. soybean, and South American crops’ positive outlooks. China is the world’s largest soybean consumer and importer, and the nation has recently cancelled approximately 600,000 tons of U.S. soybean orders as a result of low domestic demand and recent price drop, which had made the soybeans unprofitable.
Looking at the trend from technical analysis’ aspect, there appears to be a flag pattern that started on Thursday (Nov.15th), and ended on Friday (Nov. 16th). Flags usually result in an upward price trend that spikes above the upper trend line, which means an increase in soybean prices. However, if I identified it correctly, the last candlestick shows a hanging man, which signals an increase in selling pressure. To further justify this, the price briefly spiked in between the flag and hanging man patterns, as shown on the graph above. This could be the result of the flag pattern, which caused the prices to increase. If this was true, soybean future prices are likely to decrease at the opening of the market on Monday (Nov. 19th).
Overall, I anticipate soybean future prices to fluctuate throughout next week. Future prices are likely to stay low, and given the available global soybean supplies, and the futures price patterns, I do not foresee a sharp increase in soybean future prices.
Reference
http://www.agriculture.com/markets/analysis/soybeans/soybes-slip-on-wear-ccelled-ders_10-ar27583
http://www.brecorder.com/agriculture-a-allied/183/1259144/
http://futures.tradingcharts.com/intraday/ZS/13
http://www.investopedia.com/university/technical/techanalysis8.asp#axzz2CRtOz7W0
http://www.mysinchew.com/node/79886?tid=37
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks
http://uk.reuters.com/article/2012/11/16/markets-commodities-idUKL1E8MGCUR20121116