Ahead of the Open | September 28, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 8 to 10 cents lower.
Wheat: SRW steady to 2 cents lower; HRW 3 to 5 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each saw selling pressure overnight, with soybeans leading the way lower. Technical selling may persist in soybeans, but price action is likely to be partially forced by positioning ahead of Friday’s USDA Grain Stocks report. A Reuters report this morning indicated that China is believed to have purchased several hundred thousand metric tons of corn from Ukraine in the past two weeks, which is unsupportive as U.S. corn sales to China continue to lag heavily behind the past two years. Weather across the Corn Belt is expected to be mostly good for harvest, though additional rain is expected to come into the region from Oct. 5-12, World Weather Inc says.
The possibility of a government shutdown has increased as House Republicans declined to consider a bipartisan Senate proposal aimed at extending government funding beyond the Sept. 30 deadline. In response to the congressional standoff, the White House Office of Management and Budget directed federal agencies to prepare for the possibility of notifying employees about the status of government funding. Both the Senate and the House are pursuing separate approaches to extend government funding beyond Sept. 30 and there are no ongoing negotiations between the two for a short-term spending bill agreeable to both chambers. Instead, each chamber plans to advance its legislation and challenge the other to accept or reject it. Bottom line: As the weekend deadline approaches, the risk of a government shutdown is growing, with significant differences between the House and Senate on how to address the issue.
Crude palm oil (CPO) prices in 2024 are likely to average at least 11% more than this year as El Nino weather patterns are expected to reduce output in top producer Indonesia, the Indonesian Palm Oil Association (GAPKI) said. In 2024, average CPO prices, including cost, freight, and insurance (CIF Rotterdam), could rise to $1,000 per metric ton from around $900 in the current year, said Fadhil Hasan, head of foreign affairs division at GAPKI. Meanwhile, Malaysia's palm oil production is likely to rise next year as more plentiful labor and the maturation of plantations for harvesting offset the impact of the El Niño weather pattern, the Malaysian Palm Oil Board said.
The United Auto Workers (UAW) union is planning to expand its strike against Detroit automakers on Friday unless there is substantial progress made in negotiations. The UAW started a walkout at General Motors, Stellantis and Ford plants on Sept. 15 and expanded that a week later at plants run by the former pair.
Export sales for the week ended Sept. 21:
Corn: Net sales of 841,800 MT for 2023-24, up sharply from the previous week and 51% from the four-week average. Increases primarily came for the Philippines, South Korea and Japan. Exports were a marketing year high at 584,600 MT. Traders expected net sales between 475,000 MT and 1.2 MMT.
Soybeans: Net sales of 672,200 MT for 2023-24, up sharply from the previous week. Increases were primarily for China, which was over 85% of the total. Traders expected net sales between 500,000 and 1.2 MMT.
Wheat: Net sales of 544,500 MT for 2023-24, which were up 51% from the four-week average and a marketing year high. Traders expected net sales between 250,000 and 500,000 MT.
CORN: December corn futures saw slight selling overnight but were supported by 20-day moving average support, currently at $4.81 3/4. This is backed by stiff support at $4.75. Bulls are targeting $4.89 resistance, though prices are likely to remain largely sideways into Friday’s Grain Stocks report.
SOYBEANS: November soybean futures broke lower out of a bear flag on the daily bar chart overnight. First support stands at $12.84 1/2, backed by $12.82 1/4. Resistance stands at the psychological $13.00 mark, then $13.10 1/4.
WHEAT: December SRW futures formed another lower high on the daily bar chart on Wednesday and continued lower overnight. Initial resistance stands at $5.85 1/4 and is backed by $5.94 1/4. Support stands at $5.75, backed by the contract low of $5.70.
CATTLE: Lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly lower as a result of the weakening cash market. Cash trade thus far this week has dropped from last week’s average of $184.73 to $183.22. The cash average has generally fallen from the first half of the week, so additional weakness in the cash market is likely. Meanwhile, Choice cutout found strong demand below $300.00, as prices rose $1.41 to $300.95 on Wednesday. Select cutout fell 59 cents to $278.51, though movement continues to show robust retailer demand at 149 loads. USDA reported net beef sales of 17,700 MT for 2023, up 42% from the four-week average.
HOGS: Lean hog futures are expected to open mostly lower as recent corrective buying is forming a bear flag on the daily bar chart and cash fundamentals continue to deteriorate. The CME lean hog index fell 17 cents to $86.14 (as of Sept. 26), the lowest level since Sept. 12 and just 13 cents above the Sept. 5 low. Wholesale pork prices dropped 52 cents to $97.76 as movement remains strong, showing packers have inventory to sell. USDA reported net pork sales of 27,400 MT for 2023, down 9% from the previous week and 6% below the four-week average.
