Ahead of the Open | October 2, 2023
GRAIN CALLS
Corn: 3 to 5 cents higher.
Soybeans: 3 to 5 cents lower.
Wheat: Winter wheat 5 to 7 cents higher; HRS 6 to 8 cents higher.
GENERAL COMMENTS: Corn and wheat saw corrective gains overnight, while soybeans saw followthrough selling. Despite final-hour government funding, outside markets are still seeing selling pressure, namely bonds as the 10-year treasury is currently fetching 4.645%. Front-month crude oil futures are modestly higher, while the U.S. dollar index is over 475 points higher to start the day.
In a last-minute effort to prevent a shutdown, President Joe Biden signed into a law a stopgap measure that funds the government for an additional 47 days, through Nov. 17. However, lawmakers still need to finalize a permanent budget appropriation plan to address the nation’s financial needs. Notably, the bill did not include funding for military aid to Ukraine, a matter of contention for some Democrats and Republicans. Senate Majority Leader Chuck Schumer (D-N.Y.) and Senate Minority Leader Mitch McConnell (R-Ky.) expressed their intent to reinstate funding for Ukraine in the final budget negotiations. It also doesn’t provide any funding for border protection. The continuing resolution provides $16 billion in disaster relief. The stopgap measure means USDA will be able to publish its October Crop Production and WASDE reports.
With a short-term stopgap spending measure in place, work and votes on fiscal year 2024 appropriations bills (and amendments) will now be a focal point, with contentious views on both sides of the political aisle and chambers. Work on a new farm bill can continue, with the same questions (timing, funding, Title 1 reform, etc.) still being unanswered. The key economic data this week will be Friday’s employment data for September.
Through the first three months of 2023-24, Ukraine exported 6.68 MMT of grain, down 2.31 MMT (25.7%) from the same period last year. The discontinuation of the Black Sea grain deal in mid-July forced Ukraine to keep alternative routes, which slowed down shipments. Exports included 3.3 MMT of wheat, 2.7 MMT of corn and 622,000 MT of barley.
Five more cargo ships are heading towards Ukrainian Black Sea ports to pick up grain for export, Deputy Prime Minister Oleksandr Kubrakov said on Sunday. The ships are using Ukraine’s humanitarian corridor it set up following Russia’s withdrawal from the Black Sea grain deal. Ukraine’s ag minister says freight rates for ships using the new corridor are “still expensive,” but have dropped 30% to 40% in the past two to three weeks.
This morning, USDA announced daily export sales of 210,000 MT of corn to delivery to Mexico for the 2023-24 marketing year and daily sales of 132,000 MT of soybeans for delivery to China during the 2023-24 marketing year.
CORN: December corn futures saw corrective buying overnight. Prices continue to be largely supported by $4.75 support, which has limited nearly all of the downside over the past month and a half. This is backed by $4.67 3/4, the Sept. 19 move low. Initial resistance stands at $4.81 3/4 and is backed by $4.88 1/4.
SOYBEANS: November soybean futures saw followthrough selling overnight. Initial support stands at $12.65 3/4, backed by $12.56 3/4. Bulls are targeting initial resistance at $12.82 1/4, which is backed by $12.94.
WHEAT: December SRW futures saw corrective buying overnight after posting a fresh contract low Friday. While wheat futures continue in a downtrend on the daily bar chart, corrective buying is not unlikely as prices have extended far below moving average resistance. Support can be found at $5.40, backed by $5.25. Resistance stands at $5.70 then $5.73 1/4.
CATTLE: Lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly lower as cash prices are likely to slip. Last week’s cash average is likely to fall more than $1.00 from the prior week and fresh contracted supplies are likely to limit packer demand this week, further pressuring cash prices. Paired with the weaker wholesale beef market, which saw Choice falling 73 cents to $300.78 and Select dropping $1.40 to $276.04 Friday, futures market strength will likely be limited to start to week, though tight market-ready supplies are likely to keep losses limited.
HOGS: Lean hog futures are expected to open mostly lower in a continuation of Friday’s selling pressure. Both October and December futures closed down the daily limit on Friday, so limits will be expanded to $5.50 in trading today. While both contracts closed limit down, sellers struggled to keep prices locked at limit, expressing the lack of seller interest as prices that are already steeply discount to the cash index, which could keep losses limited. The CME lean hog index dropped 56 cents to $85.58 (as of Sept. 28). This put October futures $5.38 below today’s cash quote, while the December contract held a $13.805 discount, as of Friday. Meanwhile, pork wholesale prices saw a 31-cent rise on Friday, led higher by a $7.13 jump in picnics.
