Wheat, Corn and Soybeans Drop Post-WASDE—Where to Next?
Wheat, Corn and Soybeans Drop Post-WASDE—Where to Next?
WASDE delivers expected results, but crowded longs see prices drop
- The WASDE report meets bearish market expectations.
- Corn, Wheat and Soybeans drop in response.
- What lies ahead for the commodities market?
The August World Agricultural Supply and Demand Estimates (WASDE) for August crossed the wires on Friday, and the results delivered expectations for lower exports, production and ending stocks.
However, prices across the commodities sector fell following the report. That is likely explained by the broadly bullish expectations going into the report, which crowded the market with longs. Once the market shakes out some speculation, we may return to a more bullish posture, but for now, it’s a guessing game as the price action leaves us guessing.
Wheat WASDE results
Wheat sees reduced supplies, lower demand, lower trade and reduced stocks on a global scale, according to the report. The Department of Agriculture reduced 2023-2024 estimates for supply by 4.3 million tons to 1.06 billion. That was driven largely by production shortfalls for the European Union (EU), Canada and China, with Ukraine partially offsetting the reductions.
Estimates for Global wheat consumption fell 3.4 million tons to 7.96 billion because of reduced feed demand as well as food, seed and industrial demand from China. Projected global ending stocks for 2023-2024 fell to 265.6 million, the lowest since 2016.
The technical picture for wheat prices (/ZW) is bearish. A break below support from a double top pattern threatens to see the current move lower continue. A drop to the May low may be in the cards. Alternatively, a reversion higher may see prior support turn resistance.
Corn WASDE results
Per the report, global coarse grains see lower U.S. and EU corn exports for 2023-2024, with lower supply, reduced trade and a drop in ending stocks from July’s report. U.S. corn use was cut by 95 million bushels to 14.4 billion on a smaller crop. Ending stocks saw 60 million bushels cut to 2.2 billion as supply fell faster than demand.
Corn prices (/ZC) have retraced the July move and now sit at a pivotal point near 475. Friday’s candle highlights the volatility that broke the range of the prior week’s price action. That said, the outlook is neutral until we get some follow-through on a direction. Although the downside risk seems greater, given the recent selling.
Soybeans WASDE results
Soybean production for 2023-2024 was lowered to 4.2 billion bushels after a 95 million bushel cut because of lower yields. The total supply for 2023-2024 is down 2% from a year ago at 4.5 billion bushels. Ending stocks are set at 245 million bushels after a 55 million bushel cut from last month. The season-average price is forecasted at $12.70 per bushel, up 30 cents from July. Global ending stocks also were reduced, cut by 1.6 million tons to 119.4 million because of lower U.S. inventory.
Soybean prices (/ZS) fell after the report and traded around the 50-day simple moving average (SMA). While prices have trended lower over the past several weeks, an impending Golden Cross pattern is forming as the 50-day SMA approaches the 200-day SMA. That is a bullish signal that may generate some speculative buying.
The week ahead
8/14
- ERS Wheat Data
- NASS Crop Progress
8/15
- ERS Wheat Outlook: August
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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