Ahead of the Open | October 18, 2023
GRAIN CALLS
Corn: 4 to 6 cents higher.
Soybeans: 9 to 12 cents higher.
Wheat: SRW 6 to 9 cents higher; HRW 4 to 6 cents higher; HRS 5 to 7 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the upside overnight, continuing to show relative strength. Soybeans will be further supported by this morning’s daily export announcement, as USDA reported sales of 132,000 MT of soybeans to delivery to China for the 2023-24 marketing year. Outside markets are mixed, as front-month crude oil futures are trading just over $1.00 higher at $86.60 and the U.S. dollar index is around 100 points higher. The 10-year treasury yield is just three basis points from recent highs at 4.86%, though bond selling has been light so far today ahead of several Federal Reserve members’ speeches.
President Joe Biden has arrived in Israel, where he faces the challenging task of showing support for the United States’ closest ally in the Middle East while also working to prevent the Israel/Hamas conflict from escalating further. During the trip, Biden was originally scheduled to travel to Jordan to meet with King Abdullah II, Mahmoud Abbas, the president of the Palestinian Authority, and Egyptian President Abdel Fattah el-Sissi. The meeting in Amman was canceled after a rocket struck a Gaza hospital killing and injuring hundreds on Tuesday.
Jim Jordan (R-Ohio) faces an uphill battle in his quest to become Speaker of the House amid Republican divisions. Another vote on Jordan is expected around 11 a.m. ET. The divisions within the party have left the future Speaker unclear, leading to suggestions that acting Speaker Patrick McHenry (R-N.C.) could be a temporary solution to bridge the gap. His authority is currently limited to overseeing the election of a new speaker. A motion to formally elect McHenry following the second vote on Jordan’s speakership today is expected, assuming Jordan again falls short.
China is short-bought on soybeans and soybean crush margins are robust, a China watcher informs, with logistical problems in both Brazil and the U.S. limiting recent purchases. China is closely watching transportation glitches in both countries and will soon accelerate its purchases of U.S. soybeans, the source informs.
China’s economy grew 4.9% versus year-ago during the third quarter, beating market forecasts of 4.4%. That was down from growth of 6.3% in the second quarter, but offered hopes it will meet the official annual target of around 5% this year, as sustained stimulus from Beijing offset the impact of a prolonged property crisis and weak trade.
CORN: December corn futures erased the last two session’s losses in the overnight rally. Prices quickly reclaimed the 40-day moving average, currently at $4.89 1/2, as support. This is quickly backed by $4.88 1/4, then $4.85 1/2. Bulls are ultimately targeting a daily close above $5.00, though $4.95 resistance stands on the way.
SOYBEANS: November soybean futures continue to march higher, though buying was stalled by 40-day moving resistance, currently at $13.07, overnight. This level is backed by $13.15 3/4. Bulls are seeking to hold support at the psychological $13.00 level, backed by $12.92 1/4, with significant backing from $12.80.
WHEAT: December SRW futures trended higher in overnight trading after testing downtrend line support in a test of last week’s breakout on Tuesday. If prices remain above $5.70 support in today’s session, that would confirm last week’s breakout from the recent downtrend and indicate additional buying is likely. Bulls are targeting resistance at $5.79 then $5.91 1/4.
CATTLE: Choppy/higher.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly higher as wholesale beef prices continue to strengthen. The strengthening wholesale market could increase packers’ willingness to increase cash cattle bids again this week, though margins remain in the red. Retailers have been selective buyers above the $300.00 level in Choice and $275.00 in Select, so sustained strength would point to a significant shift in the recent trend, supporting cattle prices into the winter months. Choice cutout rose 47 cents to $305.14 Wednesday, while Select surged $1.43 to $278.63.
HOGS: Lean hog futures are expected to open lower in followthrough selling after Tuesday’s contract low. December futures continue to fall in a steep downtrend on the daily bar chart. Cash fundamentals continue to erode, as wholesale pork prices fell $1.67 to $89.55, the lowest level in over four months. Movement remained strong at 354.62 loads, the most since Sept. 26, indicating that packers have significant inventory to move. The CME lean hog index continues its seasonal weakness, as it fell 45 cents to $81.15 today (as of Oct.16).
