Ahead of the Open | September 8, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: Steady to 2 cents higher.
Wheat: Winter wheat futures steady to 2 cents higher; HRS steady to 2 cents lower.
GENERAL COMMENTS: Muted volatility was seen across the grain markets overnight, which is likely to continue until Tuesday’s Crop Production report. The export sales report is unlikely to have much of an effect on markets as they came within expectations. Outside markets are supportive with front-month crude oil futures remaining near nine-month highs and the U.S. dollar index modestly weaker.
Romania approved a plan to upgrade road infrastructure around the Black Sea port of Constanta, part of wider investments in the port that could help bring in more Ukrainian grain for shipment. The transport ministry will use European Union funds to repair or reinforce existing infrastructure, build new roads, access ramps and roundabouts, as well as launch a digitized traffic management system, the draft project showed. Romanian officials have said they aimed to double the monthly transit capacity of Ukrainian grain to Constanta to 4 MMT in the coming months.
Senate Ag Committee Chair Debbie Stabenow (D-Mich.) highlighted the potential $11 billion cost of a government shutdown and its impact on farm bill funding. She expressed the need to secure funding by attaching expiring farm bill programs to a continuing resolution (CR) for government funding beyond Sept. 30 and stressed the importance of using these funds for investments in farmers and rural America.
President Joe Biden has embarked on a journey to the G20 summit in India with the aim of strengthening alliances on the global stage, particularly in light of the absence of Chinese and Russian leaders. Biden’s goal is to demonstrate that, on significant transnational issues, the U.S. is a more reliable partner than Beijing or Moscow, reaffirming the importance of the G20 as a pivotal international forum.
The USDA reported daily sales of 121,000 MT of soybeans for delivery to China during the 2023-24 marketing year.
Export sales for the week ended Aug. 31:
Corn: Net sales reductions of 15,200 MT for 2022-23, leaving carryover sales at 1.113 MMT that rolled over to new crop. Net sales of 949,700 MT for 2023-24, slightly below the previous week. Traders expected -200,000 to 100,000 MT for 2022-23 and 400,000 to 1,000,000 MT for 2023-24.
Beans: Net sales of 155,600 MT for 2022-23, leaving carryover sales of 1,222,700 MT that rolled over to new crop. Net sales of 1.783 MMT for 2023-24, in the middle of expectations. Traders expected -200,000 to 0 MT for 2022-23 and 1.4 to 2.0 MMT for 2023-24.
Wheat: Net sales of 370,300 MT for 2023-24, near the lower end of expectations but 13% above the previous week. Traders expected 250,000 to 600,000 MT for 2023-24.
CORN: December corn futures continue to trade in a tight range ahead of next week’s Crop Production report. Prices have put a series of higher lows and lower highs in place, daily ranges have tightened over the course of the week as well. First support stands at $4.85 3/4, bulls have to hold $4.79 to protect against a technical breakdown. Bears are aiming to defend $4.89 1/4 resistance.
SOYBEANS: November soybean futures continue to struggle to find a bottom as prices have pulled 50-cents lower from last week’s high. Price was supported by the 40-day moving average overnight at $13.51. Bulls are targeting initial resistance at $13.67 1/4, backed by $13.81.
WHEAT: December SRW futures based near the $6.00 level most of the night, the recent rejection off 10-day moving average resistance (currently at $6.07 1/2) is likely to continue into the contract low at $5.92 1/4. Until a daily close occurs above the 10-day moving average, the downtrend is likely to continue.
CATTLE: Steady/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open mostly higher as cash cattle activity picked up on Thursday with trade reported within a wide range from $179 to $187. While underlying cash strength could spur additional buying, some profit-taking could occur as cattle futures are trading near contract and record highs. Cutout prices weakened on Thursday, with Choice values falling $1.91 to $311.66 and Select falling $1.44 to $286.17. USDA reported net beef sales of 13,500 MT for 2023, down 34% from the previous week.
HOGS: Lean hog futures are expected to open with a mostly stronger tone as technicals continue to drive prices higher. The uptrend on the daily bar chart is in threat of being broken, which would accelerate selling, but the trend remains higher for the time being. The CME lean hog index posted it’s first increase in over a month, rising 18 cents to $86.19. Seasonal strength in the cash index is not uncommon in September and early October, which could be the catalyst needed to break through resistance. A weaker cutout Wednesday could also undercut futures, as wholesale prices fell $4.12 Thursday to $94.21, led by weakness in bellies and hams. USDA reported net pork sales of 27,700 MT for 2023, down 30% from the previous week.
