Ahead of the Open | October 20, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 2 to 5 cents lower.
Wheat: Winter wheat 3 to 5 cents higher; HRS 1 cent lower to 1 cent higher.
GENERAL COMMENTS: Corn saw followthrough buying overnight but saw some profit-taking into the break, soybeans faced mild corrective selling and wheat saw followthrough buying. Outside markets are supportive this morning, as interest rates are easing, front-month crude oil futures saw followthrough buying and are around $1.10 higher and the U.S. dollar index is trading near unchanged. Harvest conditions are expected to deteriorate through the week next week and into the end of October/early November due to rain and snow.
Rep. Jim Jordan (R-Ohio) said he would push for another vote to become House speaker. He has a press conference scheduled for 8:00 a.m. ET, with the next vote on his speaker role scheduled for Friday at 10:00 a.m. ET. The House currently faces its longest period without a Speaker since before Watergate, leaving lawmakers concerned they may appear incapable of basic governing functions. The root of the issue lies in the GOP’s internal power dynamics, with the far-right gaining prominence and causing disruptions. The inability to reach a consensus highlights the party's priorities, which are increasingly divided. Bottom line: There is no clear path forward. The absence of effective leadership and ongoing brinkmanship threaten to prolong the crisis, with the future direction of the GOP uncertain.
Some grain shipments on rivers in Northern Brazil have been halted due to a drought that has dropped Amazon River tributaries to the lowest level in over a century, according to shipping services provider Serveporto. Some barge companies “halted navigation on the Tapajos and Madeira rivers, affecting grain terminals, the primary logistics transportation method in the region,” Serveporto said.
Of the 7.15 MMT of soybeans China imported during September, 6.88 MMT (96.2%) came from Brazil, which was a 23% jump from last year. The U.S. exported only 133,692 MT of soybeans to China during September, down 88.4% from last year. Through the first nine months of this year, China imported 54.87 MMT of soybeans from Brazil, up 18% from the same period last year, and 20.08 MMT from the U.S., up 8%.
Argentina is heading to the polls on Sunday to elect a new president, with Javier Milei emerging as the favorite candidate. Milei’s radical proposal to dollarize the national currency is a highly intricate endeavor. The fact Argentines are seriously considering such a drastic step reflects the severe economic turmoil caused by inflation rates soaring up to 130%.
CORN: December corn futures saw slight followthrough buying overnight but traded around unchanged for the most part as 100-day moving average resistance at $5.05 1/2 limited gains. Friday’s have been weak throughout the month of October, some profit-taking is possible but bulls want to keep prices above $5.00 support in order to negate a possible failed breakout. A break below that level would have bulls targeting stiff support at $4.90 1/4. Resistance stands at the overnight high of $5.08, then $5.09 1/4.
SOYBEANS: November soybean futures continue to face resistance at the 100-day moving average, currently at $13.15 3/4. Above there, bulls are targeting $13.28 1/2 resistance. Some profit-taking is possible after four straight days of gains on the daily bar chart. Bulls are seeking to hold support at $13.07 1/2, backed by the $13.00 mark.
WHEAT: December SRW futures followed through to the upside overnight and remained above 40-day moving average resistance turned support, currently at $5.91 3/4. Bulls have seemingly made an interim low and are seeking to defend support at $5.88 1/2, then $5.80. The $6.00 mark remains stiff resistance, backed by $6.09.
CATTLE: Choppy/higher.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly higher, though choppy price action is likely ahead of this afternoon’s USDA Cattle on Feed Report. Traders expect the report to show the feedlot inventory as of Oct. 1 down 0.3% from year-ago at 11.420 million head, which would be the 13th consecutive month of year-over-year declines. Placements are expected to have declined 2.0% while marketings are seen down 6.8% from year-ago. Cash cattle negotiations resumed Thursday, though sales remained limited. So far this week, the cash cattle average is $186.91, above last week’s average of $184.30. Wholesale beef prices were steady on Thursday, as Choice rose 26 cents to $304.12 and Select fell 87 cents to $277.48.
HOGS: Lean hog futures are expected to open mostly lower as cash fundamentals continue to slip. The CME lean hog index fell another 25 cents today to $80.45 (as of Oct. 18) as the index continues to face seasonal weakness. Wholesale pork prices slipped 82 cents to $87.13, on four-month lows. Movement remains strong amid weakening prices, indicating packers have substantial inventory to move, as loads totaled 323.96 Thursday. Even despite the large discounts held in winter futures, prices are likely to struggle trading to the upside.
