Ahead of the Open | September 25, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: Steady to 2 cents higher.
Wheat: SRW 3 to 5 cents higher; HRW steady to 2 cents higher; HRS 1 to 3 cents higher.
GENERAL COMMENTS: Grain prices pivoted around unchanged for most of the night, though wheat futures favored the upside. Prices have held up relatively well to unsupportive outside markets, as stocks and oil prices have fallen from recent highs, the surging U.S. dollar index that is trading six-month highs, and rising ten-year treasury yields, which are currently fetching over 4.5%- the highest level since 2007.
This morning, the USDA reported sales of 1,661,160 metric tons of corn for delivery to Mexico. Of the total, 1,049,771 metric tons is for delivery during the 2023/2024 marketing year and 611,389 metric tons is for delivery during the 2024/2025 marketing year.
An overnight Russian air strike on the southern Ukrainian region of Odesa caused “significant damage” to port infrastructure and destroyed some grain storage facilities, Ukrainian officials said. The Russian attack on Odesa was the latest in a series of missile and drone strikes which Kyiv says are intended to prevent Ukraine from shipping its agricultural products to the world. Ukraine’s ag ministry said its grain exports during the first three weeks of September fell 51% from the same period last year to 1.57 MMT.
Lawmakers return on Tuesday with the tough task of passing a continuing resolution (CR) to keep the government funded past Sept. 30. The Senate will vote on a CR on Tuesday. One way some House Republicans are trying to avert a shutdown is by a discharge petition, which allows an already-introduced bill to be used as a shell for other legislative text. Thus, a deal struck by Republicans and Democrats could be tacked on to the eventual Senate proposal. A wild card is an 11th hour bipartisan spending agreement that could trigger an effort to remove Kevin McCarthy (R-Calif.) as House Speaker.
The Indian government could sell more wheat on the open market to control prices that have reached their highest in nearly eight months, the country’s food secretary said. The government could sell more wheat to bulk consumers, such as flour millers and biscuit makers, to stabilize prices, he said. India earlier this month reduced the limit on the amount of wheat stocks that wholesalers and large retailers are allowed to hold to 2,000 MT from 3,000 MT previously.
CORN: December corn futures’ range continues to tighten on the daily bar chart. Last week saw volatility, seeing a break lower in price that ultimately failed then a break higher that failed. Initial support stands at $4.75 1/4, backed by $4.73 1/2. Initial resistance is at $4.80 and is backed by $4.83.
SOYBEANS: November soybean futures continue to consolidate following last Thursday’s move lower. Prices are seemingly forming another bear flag on the daily bar chart, similar to the pattern prices made last week before breaking lower. Support stands at $12.90 and is backed by $12.82 1/4. Bulls are targeting initial resistance at the psychological $13.00 level, which is backed by $13.08.
WHEAT: December SRW futures continue to base above the Sept. 12 low but struggle to build any bullish momentum. Initial resistance stands at the 10-day moving average at $5.87 1/2, a level that has capped most gains since July. Additional resistance stands at $5.96 1/4. Bulls are seeking to hold $5.72 3/4 support, backed by the contract low at $5.70.
CATTLE: Mixed.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open mixed as prices continue to consolidate near all-time highs. Last week’s cash average is expected to come in higher and last Friday's Cattle on Feed numbers had placements falling 248,000 head (2.2%) from year-ago, though slightly less than expectations. Feedlot inventories fell for the 12th straight month as the supply side of the beef market continues to tighten. Prices continue to form a bullish consolidation pattern, though some profit-taking and additional consolidation is possible. The rebound in wholesale beef prices is price supportive for futures as well, as Choice rose $1.40 to $303.33 and Select rose $1.43 to $280.43 on Friday.
HOGS: Lean hog futures are expected to open mostly higher as recent selling was likely overdone. The CME lean hog index continues its modest rally, though it fell nine cents today to $87.08 (as of Sept. 21). Despite October futures coming within $1.00 of the index last week, the spread quickly widened back out to over $6.00. That will likely keep losses at bay in the coming days. Wholesale pork prices continue to struggle garnering support near the $100.00 level, as prices fell $1.49 to $97.26 on Friday, though most of the loss can be attributed to bellies.
