Ahead of the Open | October 23, 2023
GRAIN CALLS
Corn: 1 to 2 cents lower.
Soybeans: 8 to 12 cents lower.
Wheat: Winter wheat 2 cents lower to 2 cents higher; spring wheat 2 to 5 cents higher.
GENERAL COMMENTS: Soybean futures faced followthrough selling overnight, which spilled over to the corn market. Wheat futures mildly favored the upside is light, two-sided trade. Outside markets are relatively quiet, with both crude oil futures and the U.S. dollar index modestly weaker this morning.
Excessive heat and dryness continued from northern Argentina to center-west Brazil during the weekend. Rain fell in many areas in Argentina during the weekend and the precipitation was helpful for wheat development in the south and for future planting of corn, soybeans and sunseeds. Brazil’s interior southern crop areas and Paraguay are bracing for more excessive rainfall later this week into next week. Scattered showers and thunderstorms will develop in center-west Brazil later this week and into next week, though rainfall will be lighter than usual. Concerns about center-west Brazil’s earlier planted summer crops remain because of excessive heat and limited rain and dry soil. Some replanting will be necessary.
Brazil’s soybean planting reached 30% done as of last Thursday, according to AgRural, up from 17% the previous week but behind 34% at this time last year. Mato Grosso made a big push on planting last week, though rains will be needed given the hot, dry conditions.
Broader market focus remains on U.S. bond yields, which continue to rise. The U.S. 10-year Treasury yields rose above 5% for the first time since 2007, as investors begin to anticipate the Federal Reserve will keep interest rates higher for longer to keep inflation down. The U.S. economy has proven resilient to tighter monetary policy, suggesting a delayed path to interest-rate cuts.
Officials have confirmed the presence of highly pathogenic avian influenza in around a 50,000 bird commercial turkey flock in Buena Vista County, Iowa.
CORN: December corn futures showed signs of an upside breakout from the extended sideways range last week but failed to find sustained buying above $5.00. That level will serve as initial resistance, with stronger resistance at last week’s spike high at $5.09 1/2. Support extends from the 10-day moving average at $4.92 3/4 to the 50-day average at $4.85 1/2.
SOYBEANS: November soybean futures faced followthrough selling overnight after a poor close last Friday. Near-term support is at the 10-day moving average at $12.89 3/4 and then the 20-day average near $12.85 1/2. The psychological $13.00 mark is initial resistance, followed by last week’s high at $13.18 1/2.
WHEAT: December SRW futures paused overnight after price gains last week. Near-term resistance is at the psychological $6.00 mark and last week’s spike high at $6.04 1/2. Near-term support extends from $5.83 1/2 to $5.75.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open lower on pressure from last Friday’s Cattle on Feed Report. All three categories in the report came in on the bearish side of pre-report expectations, with the Oct. 1 feedlot inventory up 0.6%, placements up 6.1% and marketings down 10.6% from year-ago levels. The bearish report data will overshadow an uptick in the cash cattle market and wholesale beef prices last week. Choice boxed beef firmed $1.26 on Friday, while Select rose $1.22. A drop below the low from two weeks ago in December live cattle futures could trigger fresh chart-based selling.
HOGS: Lean hog futures are expected to open with a mostly weaker tone on a combination of fundamental pressure and chart-based selling. But futures are short-term oversold, so a corrective bounce can’t be ruled out. The CME lean hog index is down another 66 cents to $79.79 (as of Oct. 19), extending its seasonal price decline. December lean hog futures finished last Friday at a $13.79 discount to today’s cash quote. Meanwhile, the pork cutout value firmed 84 cents on Friday to $87.97.
