Russian Problems Could Boost Wheat Market

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wheat productionThis week’s Grain Farmers of Ontario market commentary has some potentially good news for the wheat market.

Analyst Marty Hibbs says Russia’s autumn-sown grains crops are in even worse condition than in 2009.

The 2010 harvest saw a 33 per cent drop in Russian wheat production.

Hibbs says based on the charts, the short term indicators remain positive for wheat but the main trend is still down.

He says the same is true for corn – short term positive, main trend down.

Hibbs says the charts put the next major overhead resistance is around the 3.70 to 3.80 level based on the December chart.

This week’s GFO market commentary suggests the target resistance area for soybeans at 10-10.50 basis the November contract is within striking distance.

However, Hibbs says Oil World has cut it’s forecast for Brazil’s soybean output by three million tonnes because of a critical lack of rainfall.

Grain Farmers of Ontario Grain Market Commentary:

Corn
The U.S. corn harvest advanced to 31% as of Sunday and is behind the five-year average of 53%. Crop development and harvest have been delayed by a cool summer and fall rains. A year ago, corn was 38% harvested at this time. The corn ratings are unchanged from a week ago at 74% good to excellent.
On the charts, like the wheat, the buy signal on October 6 has proven to be the bottom for the time being. We are stuck in our projected resistance levels of $3.50-$3.60. The next major overhead resistance is around the $3.70-$3.80 level based on the December chart. Short term indicators remain positive but the main trend is down.

Soybeans
Oil World cut its own forecast for Brazil’s soybean output by three million (m) tonnes. This is in contrast from other analysts predicting an increase of up to 12m tonnes. The reason cited was a critical lack of rainfall. The analysis group lowered its forecast to 89m tonnes – its estimate for Brazil’s soybean output in 2014-15.
On the charts, the November contract is still in a strong downtrend; although as of this writing we are trading at $9.70 and our target resistance area of $10.00-$10.50 basis the November contract is within striking distance. Main trend is still down.

Wheat
For those looking for a positive spin on the upcoming year, Russia’s autumn-sown grains crops are heading into winter with worse conditions than five years ago, when losses from cold weather and summer drought sent wheat production tumbling.
In fact, winter grains appeared in even worse condition than 2009, ahead of the 2010 harvest which witnessed a 33% slump in Russian wheat production. That production decline, which prompted Russia to impose a grain export ban, sent world wheat prices soaring.
On the charts, the buy signal from October 6, which caused prices to rally, is still intact. The $5.15-$5.25 price level has proven, as expected, to be quite resistant. If we manage to close above this area, our next major resistance is $5.40-$5.65. The short term indicators remain positive but the main trend is still down.
Source: Blackburn News

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