Turnaround on agricultural Commodities, Soybean Farmers to Get Government Aid

Mauricio Carrillo

Most agricultural commodities are trading down on Wednesday as investors are taking a breath after recent gains. On the other hand, the White House is considering to give $2 per soybeans bushel as government assistance to palliate trade war effects according to a report published by Bloomberg.

Soybeans are trading positive on Wednesday after retracing from 8.350 and trades back below the 20-day moving average. Corn was rejected at 3.900, but it managed to bounces back from 3.775, and it is now resuming uptrend at 3.840.

Wheat was rising too high too fast and got a rejection at 200-day moving average at 4.865. It is now trading down at 4.620. Sugar found support at 0.1115 on Tuesday, and it bounced back to trade as high as 0.1175, where the 20-day moving average rejected the unit.

The White House’s aid

Bloomberg reported on Tuesday that Donald Trump’s administration is considering a direct payment to US farmers of $2 per bushel for soybeans as an aid to offset problems caused by the trade war with China.

Experts considering this move as a call to encourage more soy planting despite the already record global supplies that have maintained prices weak.

As China is the world’s top soybean importer, US farmers are concerned about how a trade war with the leading soybean buyer will affect them. “China bought some 60% of U.S. soy exports in 2017 but curbed purchases last year when U.S. President Donald Trump imposed tariffs on Chinese goods,” Bloomberg highlighted in its report, “prompting China to retaliate with tariffs on U.S. soy, pork, corn, and other products.”

Also, the White House is also considering direct payments of 63 cents per wheat bushel as “the program is being designed to avoid skewing planting decisions one way or another,” according to the US Department of Agriculture.

Soybeans positive but back below 20-day moving average

soybeans daily chart may 22

Soybean prices are trading positive on Wednesday after recovering from a rejection suffered on Tuesday at 8.350. Investors are still digesting news about a possible direct payment from the White House as an aid to ease trade war effects.

CDFs on Soybeans are trading now at 8.201 per bushel, 1.09% positive so far today. The pair is again testing the 20-day moving average, but it has been unable to break above that level yet.

So, the oilseed is now moving inside a range between 8.100 and 8.210. A break above the mentioned 20-day moving average will open the doors for a retest of the 8.350 area. Above there, 8.500, 8.640, and the 200-day moving average at 8.705 is the most important resistances.

To the downside, if the unit is unable to break above the 8.350 and it falls below the 8.100, it will test supports at 8.000 and 7.000.

Wheat failed at the 200-day moving average, back to 4.600

Prices of Wheat is trading down for the second day in a row as the grain was unable to break above the 200-day moving average at 4.865, where the unit got a rejection that sent it to test the 4.600 area, where it found support.

The grain is now trading 0.77% negative at 4.650 on Wednesday with technical indicators suggesting that the retracement could be short-lived. However, a close above the 4.700 is vital to consolidate the uptrend movement.

Above the 4.860 level, wheat would see resistances at 4.900 and then the range between 5.000 and 5.200. Above that, February 6 high at 5.250.

This article was originally posted on FX Empire