Ahead of the Open | November 9, 2023
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: Steady to 2 cents lower.
Wheat: Winter wheat 5 to 7 cents lower; HRS 2 to 5 cents lower.
GENERAL COMMENTS: Soybeans failed to sustain early strength overnight and favored the downside into the break, while corn and wheat traded lower throughout overnight trade. Soybeans are likely to be supported by today’s large export sales announcements before the USDA reports, which are likely to dictate price action later on. Outside markets are supportive this morning, as the U.S. dollar index is modestly lower, and front-month crude oil futures are bouncing from 3 and a half month lows.
China continues to buy soybeans as concerns weigh over crop production in Brazil. This morning, USDA reported a daily sale of 1.044 MMT for delivery to China in 2023-24, beating Wednesday’s announcement and marking the largest daily purchase in months. USDA also reported an additional 662,500 MT of soybeans for delivery to unknown destinations for 2023-24.
USDA’s corn and soybean crop estimates aren’t likely to change much in the Crop Production Report at 11:00 a.m. CT. The average pre-report estimates peg corn production at 15.079 billion bu. (15.064 billion bu. in October) and the soybean crop at 4.103 billion bushels (4.104 billion bu. in October). Barring any supply-side surprises, adjustments to usage forecasts in the 2023-24 balance sheets are also likely to be minor. Traders expect 2023-24 ending stocks to come in at 2.129 billion bu. for corn (2.111 billion bu. in October), 221 million bu. for soybeans (220 million bu. in October) and 669 million bu. for wheat (670 million bu. in October). Given El Niño impacts, the potentially biggest changes could be to USDA’s global production forecasts.
Conab raised its official 2023-24 Brazilian soybean crop forecast by 417,000 MT to a record 162.42 MMT, despite erratic weather through the first two months of the growing season, as its planted area estimate increased. Conab cut its corn crop forecast by 338,000 MT to 119.07 MMT. The corn crop forecast is based off an estimate for the first crop (about one-quarter of total production) and a projection for the safrinha crop (about three-quarters of total production).
Export sales for the week ended Nov. 2:
Corn: Net sales of 1.015 MMT for 2023-24, up 36% from the previous week and 4% from the four-week average. Increases came primarily for Mexico and unknown destinations. Sales came at the higher end of expectations of 600,000 MT to 1.2 MMT.
Soybeans: Net sales of 1.08 MMT for 2023-24, up 7% from week-ago but 8% lower than the four-week average. China purchased over half of new sales (692,400 MT), with Mexico purchasing the second most. Traders expected sales between 900,000 MT and 1.5 MMT.
Wheat: Net sales of 354,300 MT for 2023-24, up 29% from the previous week but 26% lower than the four-week average. Increases came primarily for South Korea and unknown destinations. Traders expected sales between 250,000 to 500,000 MT.
CORN: December corn futures continue to struggle against prior support, now resistance at $4.77. Bulls are eyeing this mark on a rally after the report, with backing from $4.80 1/2, then $4.84 1/4. Bears are targeting $4.71 1/4 support with firm backing from $4.68.
SOYBEANS: January soybean futures saw profit-taking following an early rally overnight, though the downside remains limited by $13.62 support. Despite yesterday's surge, prices have traded largely sideways over the past three sessions, consolidating ahead of today’s reports. Bulls are seeking to hold support at $13.44 1/2 on any sustained selling, with firm backing from $13.32. Bulls are eyeing resistance at $13.73, backed by yesterday’s high of $13.84 1/2, then the psychological $14.00 level.
WHEAT: December SRW futures saw profit-taking overnight following Wednesday's jump, though prices remained above initial support at the 40-day moving average, currently at $5.82 3/4. The reports today are unlikely to have much of a direct effect on wheat, though prices are likely to trade alongside corn in any sustained move. Further support lies at the $5.75 mark, then $5.64 1/2. Bulls are eyeing a break above $5.98 3/4, which is backed by $6.04 1/2 resistance.
CATTLE: Higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone in a continuation of the strong technical rebound seen from morning lows on Wednesday. While December futures initially broke below the October low, buyers showed up under the market, closing futures higher on the session. Limited cash cattle trade at lower prices could cap futures gains as this week’s average of $180.47 is running well below last week’s average of $184.89. While there is still plenty of time for higher trade, the precedent of weaker numbers so far this week will be hard to shake. Wholesale beef prices were mixed on Wednesday as Choice continues to slip, falling $1.63 to $298.75, breaking below key $300.00 support. Meanwhile, Select firmed $1.55 to $271.03. USDA reported beef export sales of 13,600 MT for 2023, down 21% from the previous week but up 24% from the four-week average.
HOGS: Lean hog futures are expected to open with a weaker tone following Wednesday's break of uptrend line support stemming from the October low, though strength in the CME lean hog index and impressive export sales could limit selling pressure. While traders seemingly expected an early seasonal bottom in the cash market, traders took the bounce in the index as a “sell the news” event. Any sustained strength will be hard to ignore though, as the index at $76.69 (as of Nov. 7) is $5.19 above December futures. Meanwhile, wholesale pork prices continue to slide from Monday’s peak, falling $1.19 on Wednesday to $86.58. USDA reported pork export sales of 49,000 MT for 2023, up 58% from the previous week and 77% from the four-week average.
