Ahead of the Open | September 5, 2023
GRAIN CALLS
Corn: 2 cents lower to 2 cents higher.
Soybeans: 2 to 5 cents lower.
Wheat: SRW 1 to 3 cents higher, HRW 1 to 2 cents lower; HRS steady to 2 cents higher.
GENERAL COMMENTS: Corn and soybeans favored the downside is light overnight price action, while wheat was mixed following a two-sided session. Soybeans may get a boost from another daily export sale, though traders have generally ignored the recent business as new-crop bookings are running well behind year-ago and the average pace. USDA announced 251,000 MT of soybeans were sold to unknown destinations for 2023-24. That marks the seventh straight market day with daily new-crop soybean sales to China or “unknown.”
Temperatures are expected to moderate by midweek across the central U.S. after another heat wave baked crops during the holiday weekend. Most areas of the central U.S. will remain dry over the next week, though light rains are possible in the Ohio River basin and across the Northern Plains and upper Midwest.
Russian President Vladimir Putin said the Black Sea grain deal will not be reinstated until the West fulfills its commitments to facilitate Russian agricultural exports. Turkish President Recep Tayyip Erdogan was more upbeat, saying he thought the deal could be revived “in a short time.” Erdogan also said, “Ukraine needs to especially soften its approaches in order for it to be possible for joint steps to be taken with Russia.”
SovEcon raised its 2023-24 Russian wheat export forecast by 500,000 MT to 48.6 MMT, reflecting “substantial increases in the production estimate, high export pace and record-breaking sales early in the season.” The firm says “the major bottleneck for Russian grain exports is the infrastructure capacity.”
The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) cut its 2023-24 Australian wheat production forecast by 800,000 MT to 25.4 MMT as dry weather associated with El Niño threatened the crop. At that level, wheat production would fall 36% from last year and be 4% below the 10-year average.
Rains predicted for September in various parts of India are expected to mitigate crop damage and ensure sufficient food supplies after a delayed monsoon and dry August, the country’s top food bureaucrat said.
CORN: December corn futures traded in a tight range in light, two-sided overnight price action while holding in the month-plus sideways range. Near-term support is at the August low of $4.73 1/2, while resistance is at $5.07 1/2.
SOYBEANS: November soybean futures traded on both sides of unchanged overnight but favored the downside, extending the pullback from last week’s high. Near-term support extends from the 40-day moving average around $13.60 to the 20-day average around $13.49 1/2. Near-term resistance is marked by the 5- and 10-day averages in the $13.75 to $13.76 range.
WHEAT: December SRW futures scored a new contract low at $5.93 1/4 in two-sided trade overnight. That will serve as initial support, followed by the psychological $5.75 mark. Near-term resistance is heavily layered from $6.00 to $6.46 1/4.
CATTLE: Mixed.
HOGS: Mixed.
CATTLE: Live cattle futures are expected to start the week with a mixed tone coming off the extended holiday weekend. Cash cattle traded lower for a fourth consecutive week, though the average five-area price should have remained above $180.00 for a record 14th consecutive week. With market-ready supplies tightening and margins in the black, some cash sources expect packers to be more aggressive with cash bids this week, though they will have fresh contract supplies available with the flip of the calendar.
HOGS: Lean hog futures are expected to open the week with a mixed tone in two-sided trade. The CME lean hog index extended its decline since late July as market-ready supplies are building seasonally. While hog slaughter will continue to increase, a short-term uptick in prices from early September to early/mid-October is rather typical before a sharper drop through winter. Plus, futures continue to trade at a discount to the cash market.
