Grains Continue their Weakness from Tuesday

Grains continued their weakness from Tuesday by starting Wednesday in negative territory. Outside markets were also weaker for the S&P and crude oil.

Yesterday saw wheat futures carve out new contract lows and hit their lowest price for nearby futures in 5 years. Rains crossing Oklahoma and eastern Texas brought beneficial moisture to the southern U.S. Plains winter wheat belt. Also, continued pressure from huge global supplies and weak US export demand continue to weigh heavily on the wheat market.

Traders will turn their attention to Thursday’s USDA Ag Outlook Forum. Average analyst estimates are for USDA to pencil in higher corn and soybean acres in to their outlook for 2016. Analysts expect an average corn number of 89.648 mln versus 88.0 in 2015. For soybeans, 83.302 mln versus 82.7 on 2015 and wheat at 52.4 mln versus 2015 acres of 54.6.

Crude oil fell sharply on Tuesday with continued losses to start the trade day today. Saudi’s oil minister spoke at a conference in Houston, suggesting no end to the pain for the oil industry and giving no inclination of cutting back on production. Late Tuesday, the American Petroleum Institute, an industry group, said that U.S. stockpiles increased by more-than-expected 7.1-million-barrel last week. The Energy Information Administration will release its official data later on Wednesday and analysts polled by The Wall Street Journal expect an increase of 2.4 million barrels.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

—Kevin McNew