Ahead of the Open | October 17, 2023
GRAIN CALLS
Corn: 1 to 3 cents lower.
Soybeans: 5 to 7 cents higher.
Wheat: SRW 4 to 6 cents lower; HRW steady to 2 cents lower; HRS 1 to 3 cents lower.
GENERAL COMMENTS: Soybeans favored the upside overnight, corn traded near unchanged for the most part and wheat futures favored the downside. Interest rates are ticking back up which has limited the taste for risk assets, as the 10-year treasury yield is fetching 4.80%, within ten basis points of the recent high. Front month crude oil futures are trading near unchanged at $86.75 while the U.S. dollar index is around 200 points higher.
President Joe Biden is set to visit Israel and Jordan to reinforce America’s support for Israel and prevent the escalation of its conflict with Hamas in the region. During his visit to Jordan, Biden is expected to meet with Mahmoud Abbas, the Palestinian president. The World Health Organization has issued a warning that the Gaza Strip is on the brink of a humanitarian catastrophe, with only “24 hours” of essential resources like water, electricity and fuel remaining. Meanwhile, Iran’s foreign minister warned Israel that a ground offensive in Gaza would trigger “pre-emptive action.” In a broadcast on state television, Hossein Amirabdollahian suggested Iran would respond to the “war crimes” committed in Gaza and that “all options are open.” On Tuesday the Israel Defense Forces launched several strikes targeting Hezbollah, an Iran-backed Shia militia based in Lebanon.
Crop consultant Dr. Michael Cordonnier raised his U.S. corn yield estimate 1 bu. to 172.5 bu. per acre, though that is still 0.5 bu. below USDA’s forecast this month. His soybean yield was increased 0.3 bu. to 49.3 bu. per acre, which is 0.3 bu. below USDA’s October estimate. Cordonnier now forecasts U.S. production at 15.02 billion bu. for corn and 4.08 billion bu. for soybeans.
Rep. Jim Jordan (R-Ohio) seems to be edging closer to the necessary 217 votes amid a pressure campaign by his allies to win support for the conservative Republican and ally of former President Donald Trump. “My gut tells me we’re somewhere south of 10 who are still being recalcitrant,” Rep. Chip Roy (R-Texas) told conservative radio host Erick Erickson on Monday when asked about the opposition to Jordan. Former House Speaker Kevin McCarthy (R-Calif.) on Monday also expressed his optimism for Jordan’s prospects, according to The Hill. Jordan was able to recruit House Armed Services Committee Chairman Mike Rogers (Ala.) along with Reps. Ann Wagner (Mo.), Ken Calvert (Calif.) and Vern Buchanan (Fla.) to his cause, despite past statements indicating they would not do so. In total, Jordan can only afford to lose four Republican votes, assuming full attendance. Lawmakers still opposed to Jordan include Reps. Mike Lawler (R-N.Y.), Carlos A. Giménez (R-Fla.), Mario Diaz-Balart (R-Fla.), Don Bacon (R-Neb.) and Ken Buck (R-Colo.). They all indicated Monday they still oppose Jordan, putting his math on shaky ground. And GOP sources told Axios there’s a high possibility Jordan will lose more support if the vote goes to a second ballot. A vote on the House floor is slated for around noon ET today. Even if Jordan wins, it could take multiple ballots. As many as 12 people could vote against Jordan on the first round, reports note, but Jordan spent the evening making calls to the holdouts.
Rep. Jordan has put forth an unconventional proposal to avert a government shutdown on Nov. 17 when the current stopgap spending measure will expire. The plan involves passing a stopgap bill to maintain existing funding levels beyond April. This move is intended to trigger an automatic 1% across-the-board budget cut, a provision recently embedded in a debt-limit law. Jordan believes that these automatic cuts could provide Republicans with leverage in negotiations for full-year funding bills. However, the proposal has received mixed reactions among his party members, with some advocating for passing individual funding bills instead. The plan’s success would depend on approval in the Democratic-controlled Senate.
CORN: December corn futures continue to trade in a tight range. Prices were supported by 20-day moving average support overnight, which is currently at $4.87 3/4. Bears are targeting a break below the uptrend stemming from the September low, currently standing at $4.84. Bulls are targeting initial resistance of $4.94 1/4, backed by the October high at $4.99.
SOYBEANS: November soybean futures surged higher overnight above initial resistance of $12.90 1/2, which will now be support. Prices are quickly testing key psychological $13.00 resistance which capped all gains last week. Bulls are seeking to hold $12.82 support on expended selling pressure.
WHEAT: December SRW futures turned lower after Monday morning’s open and continue to see profit taking. Bulls are seeking to hold initial resistance of $5.71 1/2, which is backed by $5.55. Bears are seeking to hold resistance at $5.75 3/4 which is backed by $5.92.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open mostly lower, though strengthening cash fundamentals could limit selling pressure. Last week’s cash average firmed $1.58 to $184.30, the highest in three weeks. Once again, packers bought a large number of negotiated cattle, with purchases totaling 96,000 head. With packers well supplied on short-term slaughter needs, their urgency to actively bid for cattle this week will be reduced. This could push active cash trade until after Friday afternoon’s Cattle on Feed Report. Wholesale beef prices firmed on Monday, as Choice jumped $3.87 to $304.67 and Select rose $1.71 to $277.20.
HOGS: Lean hog futures are expected to open mostly lower as technical selling continues to drive selling pressure. December futures neared the Oct. 4 low yesterday and were supported, which may limit selling interest after the open today, though a lower low is likely as prices continue to trend lower. The CME lean hog index continues to weaken seasonally as well, with today’s quote falling 51 cents to $81.60 (as of Oct. 13). Strength in wholesale pork prices could limit selling pressure in futures, as the cutout rose 72 cents to $91.22, ending a week long decline, though that remains more than $12.00 below last year.
