Ahead of the Open | November 1, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 1 to 3 cents higher.
Wheat: SRW 4 to 6 cents higher; HRW 8 to 10 cents higher; HRS 5 to 7 cents higher.
GENERAL COMMENTS: Corn traded in a tight range overnight and went into the break near session highs, beans favored the downside but bounced into the break, while wheat saw corrective gains. Eyes will be on the Federal Reserve’s interest rate decision this afternoon, which will likely help determine the coming direction of bonds, which have traded largely sideways the last two weeks. Outside markets were mixed overnight as front-month crude oil futures saw corrective gains, making up all of yesterday’s loss and more. The U.S. dollar index is trading over 250 points higher and near recent highs.
The Federal Reserve is expected to hold monetary policy steady for a second straight meeting, waiting for the effects of prior rate hikes to further slow inflation. Markets will focus on the post-meeting statement and Chair Jerome Powell’s press conference for future guidance on the Fed’s plans, which could potentially signal whether the policy-tightening cycle has concluded.
Traders expect USDA to report soybean crush totaled 173.2 million bu. during September, according to a Bloomberg survey, which would be up 2.5% from August and 3.4% above last year and a record for the month. NOPA data implied soybean crush would come in around 175 million bushels. Corn-for-ethanol use is expected to come in at 411.8 million bu., which would be down 7.0% from August but 7.4% above last year.
Senate Ag Committee leaders are considering using a continuing resolution (CR) as a legislative vehicle to pass a one-year extension of the 2018 Farm Bill before January. Ranking member John Boozman (R-Ark.) and Chair Debbie Stabenow (D-Mich.) agree on the need for the extension while working on a new bill to replace the expired 2018 Farm Bill. They hope to attach the extension to a stopgap funding bill required when the current CR expires on Nov. 17. Stabenow had initially preferred a three-month farm bill extension, but USDA explained that shorter extensions would be challenging to administer. The Senate and House Ag committees are working on draft texts for their respective farm bills, with the possibility of finalizing a version by spring. A farm bill extension would provide security for farmers and ensure the availability of risk management tools and financial support. The committees have not yet decided which, if any, of the 21 so-called “orphan programs” would be part of the extension, potentially requiring offsets or additional funding sources.
CORN: December corn futures continue to trade in a tight sideways range, as prices have traded the $4.80 mark six sessions in a row. Bulls are seeking to hold prices above $4.78 support, which is firmly backed by $4.74. Bears are seeking to defend resistance at $4.80 3/4, backed by $4.83, then Monday’s high of $4.84 1/4.
SOYBEANS: November soybean futures continue to be supported by uptrend support, which currently stands at $12.86. A break below this trendline would have bears targeting $12.72 1/4. Bulls are seeking to capture initial resistance at $12.91 1/2, backed by $12.97 1/4, then the psychological $13.00 mark.
WHEAT: December SRW futures saw corrective buying overnight as prices were supported by $5.55 support. A break below this level would have bears targeting support at $5.47 1/4, backed by the contract low of $5.40. Bulls are looking to capture resistance at $5.70, quickly backed by the downtrend stemming from the October highs at $5.74.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone as bulls have struggled to fill last week’s downside gap. Technical resistance is likely to weigh heavily on the market today and Tuesday’s candle on the daily bar chart indicates stiff technical resistance just above the market. Wholesale beef prices turned lower Tuesday as well, as Choice fell $4.10 to $304.18 and Select dropped $1.39 to $279.50, erasing most of last week’s gain. The lack of cash cattle trade thus far this week provides little direction for futures. Cash trade is likely to remain limited until the end of the week as packers have fresh contracted supplies starting today. Any active cash trade could limit early selling pressure.
HOGS: Lean hog futures are expected to open mostly lower as cash fundamentals continue to decline seasonally. While it used to be more common for the CME lean hog index to stabilize before the holiday season in October or November, that has not been the case in recent years. Traders seem to believe the former is the case this year, as they continue to narrow the premium futures hold to the cash index, which fell another 38 cents to $77.13 today (as of Oct. 30). That narrow spread leaves the door open for additional selling in futures if cash prices do not stabilize sooner than later. Wholesale pork prices continue to trade largely sideways, but fell $1.38 Tuesday to $86.48, led lower by bellies and picnics.
