Ahead of the Open | September 29, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: Steady to 2 cents lower.
Wheat: 3 to 5 cents higher.
GENERAL COMMENTS: Corn and soybeans pivoted around unchanged for most of the night while wheat saw light corrective buying. The Quarterly Grain Stocks report and potential positioning ahead of a likely Government shutdown are likely to dictate price action today. Front -month crude oil futures continue to show strength near 10-month highs and the U.S. dollar index is over 400 points lower to start the day.
USDA’s Quarterly Grain Stocks Report at 11:00 a.m. CT will set final 2022-23 ending stocks for corn and soybeans. The report has a history of surprises, especially for corn, with analysts routinely missing those estimates by a wide margin. Traders expect USDA to report Sept. 1 stocks at 1.429 billion bu. for corn, 242 million bu. for soybeans and 1.772 billion bu. for wheat. The report has also historically featured revisions to the previous year’s soybean crop and since 2020 the prior year’s corn production. USDA will also issue its final estimates for 2023 wheat production in the Small Grains Summary. Traders expect all wheat production to come in at 1.729 billion bu., which would be down 10 million bu. from the August estimate.
The Mississippi River dropped to a reading of -10.62 feet on the Memphis, Tennessee, gauge on Thursday, just above its all-time low of -10.81 feet on Oct. 21 last year, according to NWS data. The river is expected to remain below the -10 foot mark into at least mid-October, according to the latest forecast. The low-water crisis is unfolding at a critical juncture as the harvest of corn and soybeans is rapidly advancing, and simultaneously, barge rates are on the rise. Barge rates have soared to over 900% of their underlying tariff in some locations due to the impact of low water levels. Portions of the river have been closed 22 times since Sept. 1 for dredging or to remove barges that have run aground – at least 36 groundings have been reported, the U.S. Coast Guard said.
The House is expected to address a Republican-proposed stopgap bill today, aiming to extend government funding. However, House Speaker Kevin McCarthy (R-Calif.) is facing challenges in gathering the necessary votes to pass the bill, leaving Congress on the brink of triggering a shutdown. Both the Senate and House are deadlocked in negotiations on how to ensure the government’s continued operation, and with funding set to expire at midnight on Saturday, a shutdown appears inevitable. McCarthy’s stance remains uncertain as he has not confirmed whether he would seek a compromise with Democrats if conservative renegades reject his stopgap proposal. This situation poses a significant test to his leadership as Speaker, with some House conservatives suggesting the potential for a vote to remove him from his position.
This morning, USDA reported daily sales of 223,540 MT of corn for delivery to Mexico.
CORN: December corn futures saw muted price action overnight after prices closed in on resistance at $4.89 in frenzied buying ahead of Thursday’s close. The USDA Grain Stocks report will likely dictate most of price action today, with limited movement ahead of the 11:00 a.m. CT report. Initial resistance stands at $4.89 and is backed by $4.94, while support lies at $4.83 then the $4.80 mark.
SOYBEANS: November soybean futures saw intense selling pressure on Thursday’s open that was ultimately faded, leading to a reclaim of $13.00 resistance, which has acted as support overnight. Additional support comes in at $12.95 then $12.87. Bulls are targeting initial resistance at $13.05, then $13.09 3/4
WHEAT: December SRW futures saw limited buying overnight as gains were capped by initial resistance at $5.85. Bulls are seeking a daily close above $5.93 1/4 resistance. Bears are seeking to break initial resistance at $5.78 3/4, quickly backed by $5.75, then the contract low at $5.70.
CATTLE: Choppy.
HOGS: Lower.
CATTLE: Live cattle futures are expected to continue recent consolidation after prices inched to a new all-time high on Thursday. Prices have traded sideways over the past two weeks, with yesterday’s breakout above resistance ultimately failing to attract fresh buying. It will take renewed strength in the cash market for October futures to find sustained buying above the $187.00 mark. So far this week, the cash average is $183.53, down $1.01 from last week’s cash average of $184.54 at this point. Wholesale beef prices continue to base, with Choice settling just above the $300.00 mark as cutout rose 56 cents to $301.51 Thursday, though Select fell $1.07 to $277.44.
HOGS: Lean hog futures are expected to open mostly lower on pressure from USDA’s Hogs & Pigs Report Thursday afternoon. Traders expected modest hog herd contraction as of Sept. 1, instead the herd size increased 194,000 (0.3%) head from year ago – 787,000 head more than the average pre-report estimate implied. The CME lean hog index remains steady at $86.14 today (as of Sept. 27). Meanwhile, wholesale pork prices continue to slip, falling 84 cents to $96.92 Thursday with losses across the board, apart from a rise in hams.
