Jump to content

Corn, Soybean and Wheat drop into support as yield concerns drive resurgence


Recommended Posts

Agricultural commodities show signs of potential strength as lower yields bring potential for further upside

bg_corn_crop_harvest_377303410.jpgSource: Bloomberg
 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 02 September 2022 

Agricultural commodity prices have been on the rise of late with the likes of Soybeans, wheat and corn showing the potential of a bullish reversal after periods of weakness. Understandable concerns around demand in the face of global recessionary pressures have driven prices lower, yet the resurgent we are seeing serves to highlight the repercussions of a particularly hot summer in the Northern Hemisphere. Subsequent questions around potential shortfalls in yield do provide the basis for supply demand questions that could benefit these markets. Meanwhile, elevated natural gas prices have also served to drive up the cost of fertiliser, similarly raising questions around the ability to achieve comparable yields against previous years. The latest comments from the US Department of Agriculture stated that "US feed grain production in 2022 is forecast to be 6.3 million tons lower this month, reflecting lower yields in corn, sorghum, and barley. US corn production is lowered 146 million bushels on a 1.6 bushel per acre yield drop to 175.4 bushels." This clearly has the potential to raise prices, although there is some speculation that such a move could lead to lower demand from China. Thankfully Chinese Corn demand hit a record hit in 2021, so they are at relatively elevated levels nonetheless.
From a charting perspective, there is a chance that the recent weakness provides a buying opportunity as we see signs of a potential bottoming out over the past month. As such, let's take a look at these markets with a view to understanding the potential for further upside.

Corn looks to have bottomed out over the course of the past two-months, with price starting to turn higher from a confluence of the 50-SMA and 76.4% Fibonacci support. With price steadily creating higher lows over the course of the past six-weeks, this latest pullback looks to have provided us with a fresh buying opportunity here.

C-4-hours-2022_09_02-12h35.pngSource: ProRealTime

Soybean prices have similarly been gaining ground over the course of the past month, with the recent pullback taking us into trendline support. While we could see that bullish trend negated with a break below $13.79, it makes sense to expect a continuation of the trend until such a move takes place.

S-4-hours-2022_09_02-12h43.pngSource: ProRealTime

Wheat prices have managed to push up towards the $8.55 resistance level, raising hopes of a bottom taking shape. However, it is notable that we are yet to see that level break, raising the risk that price simply remains within the $7.62-8.55 range seen over the course of the past two-months. Nonetheless, with price at the 76.4% Fibonacci support level, this is an interesting region of support that should help inform us over where we go from here. Ultimately, we would need to see $8.55 broken to bring greater confidence that price has bottomed out in a similar manner to Soybeans and Corn.

W-4-hours-2022_09_02-12h53.pngSource: ProRealTime
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 12:53

    Newest Member
    Joined 29/01/23 20:47
  • Posts

    • Does anybody know the BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) equivalent with a GBP currency hedge? I want the interest yield but I don't want the currency risk.
    • Capital, win loss ratio. If you have a trading edge and you can consistently win 50% of your trades, so your winning 5 trades out of 10. So if your risking 1% of your capital per trade, out of your 10 trades 5 would be losers, so that’s 5% loss and realistically out of the 5 winning trades, some would make small profits, some break even and 1, 2 or 3 could run nicely IF you can let your profits run, basically your making money out of 2 trades out of the 10 trades (80/20 Rule Pareto principle) So a $20,000 acct risking 1% is $200 per trade, this will keep the trader with his trade risk based on being able to win 50% of his trades. A long term trend trader can win with 30% wining trade. Basically you need to know your numbers. Rgds Pete
    • Investing in stocks can be a great way to grow your wealth over time. However, there are different approaches that investors can take when choosing which stocks to buy. Two of the most popular approaches are growth investing and value investing. Growth Investing Growth investing is an investment strategy that focuses on buying stocks of companies that are expected to grow at a faster rate than the overall market. These companies are often in industries that are growing quickly, such as technology or healthcare. Investors who use this approach believe that these companies will be able to generate higher profits in the future, which will lead to higher stock prices. One of the main advantages of growth investing is that it can potentially provide higher returns than the overall market. However, it is also riskier than other investment strategies, as these companies often have higher valuations and more volatile stock prices. Value Investing Value investing is an investment strategy that focuses on buying stocks of companies that are undervalued by the market. These companies may be in industries that are out of favour or have recently experienced challenges, but they have strong fundamentals and a history of profitability. Investors who use this approach believe that these companies are undervalued and that their true value will be recognized in the future, leading to higher stock prices. One of the main advantages of value investing is that it can potentially provide lower risk than growth investing. However, it may also provide lower returns in the long run, as these companies may not have the same growth potential as companies in the growth investing category. Comparing Growth and Value Investing Growth and value investing are two different approaches to stock investing, each with its own advantages and disadvantages. Growth investing can potentially provide higher returns but is riskier, while value investing can provide lower risk but potentially lower returns. An investor may choose one approach or a combination of both. A portfolio that contains a mix of growth and value stocks can provide a balance of potential returns and risk. Conclusion Both growth investing and value investing can be effective ways to invest in stocks. The key is to understand the potential risks and rewards of each approach and to choose the one that aligns with your investment goals and risk tolerance. Analyst Peter Mathers TradingLounge™ 
  • Create New...