Ahead of the Open | October 25, 2023
GRAIN CALLS
Corn: Steady to 2 cents lower.
Soybeans: 2 to 4 cents lower.
Wheat: Winter wheat markets steady to 2 cents lower; spring wheat 1 to 2 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat held in relatively tight trading ranges during two-sided overnight trade. Outside markets were also relatively quiet, with both crude oil and the U.S. dollar index modestly firmer. Given the lack of fresh market-moving news, we expect the relatively quiet trade to continue during daytime trade.
USDA reported daily soybean sales of 126,000 MT to China for 2023-24, which should limit selling pressure on futures.
Soymeal has been the market that has moved the most recently. It was also quiet during the overnight session. But with increasing talk Argentina will run out of soybeans to crush, and therefore export, underlying fundamentals are bullish.
The European weather model reduced rain in center-west Brazil for days seven to 10 days relative to the past few days. World Weather Inc. says that model has been too wet most of this week so far, so this change was a step in the right direction. Rainfall is expected to increase in center-west Brazil, but it may take a while for a good distribution of “significant” rain to fall.
World Weather says Argentina will see some periodic showers that will help maintain status quo conditions after recent rains improved soil moisture. Interior southern Brazil and southern Paraguay will become excessively wet this weekend into next week, resulting in some flooding.
CORN: December corn futures modestly extended the pullback from last Friday’s spike high during overnight trade. The contract is now trading well below the short-, intermediate and long-term moving averages, signaling bears have the upper hand. While we believe a harvest low is in place, price action since late last week signals any move higher is going to be a grind, not a rocket shot, barring some unforeseen event.
SOYBEANS: November soybean futures pulled back overnight after yesterday’s strong close. Clear near-term boundaries extend from Tuesday’s low at $12.80 1/2 to last week’s high at $13.18 1/2. But the key for near-term price action will continue to be the soymeal market, which has exploded recently.
WHEAT: December SRW futures are pivoting around the 10-day and 40-day moving averages, while holding above the 20-day average and below the 50- and 5-day averages. The contract is seemingly in a holding pattern, waiting on corn to make a strong move to provide leadership. As mentioned above, that may take some time.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone after the market finished well off session highs on Tuesday. The inability to maintain strong corrective gains posted earlier in the day suggests the market could make another push to the downside. Tuesday’s low at $177.30 in December live cattle will be key near-term support, as violation of that level would open the door for a fresh wave of chart-based selling. Cash cattle trade so far this week has been at lower prices, mostly in Iowa. Wholesale beef prices firmed on Tuesday, with Choice up $1.44 and Select $2.98 higher.
HOGS: Lean hog futures are expected to open with a mostly lower tone amid continued pressure on cash fundamentals. The CME lean hog index is down another 40 cents to $78.67 (as of Oct. 23), falling to the lowest level since May 17 and now more than $16.00 below last year at this time. The pork cutout value fell $1.96 to $86.59, now more than $15.00 below last year. Until cash fundamentals stabilize, buyer interest in futures will remain limited.
