Outlook of agricultural futures market

News list

According to official statistics USDA for 2014/15 MY and forecasts for 2015/16 and 2016/17 MY world production rise faster than demand, leading to an increase in ending stocks.

In the case of wheat production level at the same level, around a record 727 million tons. With the possibility of exceeding the results of 2016/17 MY. At the same time, consumption slightly reduced, allowing end-stocks grow, and stock-to-use ratio should reach 38%.

In the case of corn variation of production on the above mentioned marketing year about 50 mln. tons, but consumption varies from 30 million tons. Dynamics of world trade could be declined in the 2016/17 marketing year and the volumes have to decreased by 15 mln. tons compared with 2014/15. The ratio of stock-to-use should remain at a comfortable level - 25%.

World production of soybeans may set a new record, but at the same time increasing the level of consumption. Thus, from 2014 to 2017 growth should reach 21 mln. tons, the volume of world trade should rise by 9 mln. tons. The ratio of stocks-to-use at the end of the 2016/17 marketing year forecast at 16.7% (-4% from 2014), the stocks will fall to 15 mln. tons.

Looking at the numbers it becomes clear why soy complex has received the most support from market players and, in view of surplus grain, oil shows the best dynamics and, most likely, the funds right in choosing their position through the fundamentals of supply and demand balance.

The July contract for corn at the end of last week rose 18.25 cents a bushel, fixing week above important resistance level of 4.11 dollars per bushel. The next target price will be USD 4.31 per bushel. Support prices provide both hedgers and speculators; funds hold the largest number of open long positions from August 2015 - 183 000. Weekly stochastic although above overbought level, but still maintains upward trend.

The July contract for soybeans rose on the results of the trading week at 12.25 cents a bushel saving term uptrend. The nearest support level - 1041.75 cents per bushel; resistance level - 1158.75 cents per bushel. But long-term contracts (including November) do not have such strong support "bulls". The number of open long positions declined, and daily stochastic generally indicates a return to a falling trend.

July wheat contract also managed growth in the last week due to the closure of the "short" positions by speculators. This market was able to move in short-term upward movement the level of support - 516.25 cents per bushel. Relative Strength Index also supports the upward movement in the short-lived run.