Ahead of the Open | November 14, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents higher.
Wheat: Winter wheat 2 to 4 cents higher; HRS 3 to 5 cents higher.
GENERAL COMMENTS: Soybeans favored the downside overnight, while corn and wheat saw lighter price pressure. Each saw buyers come under the market this morning though and rallied into the break. Prices were supported by weaker than expected inflation data, which sent the U.S. dollar index sharply lower amid falling bond yields, sending the 10-year treasury yield to the lowest level since mid-September. Front-month crude oil futures are trading higher for the third straight session in a row, spurred higher by this morning’s BLS report.
Bureau of Labor Statistics (BLS) released the October Consumer Price Index (CPI) this morning, which came in steady from month-ago, despite trade expecting CPI to rise by 0.1% month-over-month. This sent risk assets soaring under impressions that the Fed’s tightening cycle is working and nearing its end.
Hot and dry conditions across much of central Brazil are delaying soybean planting, slowing crop development and resulting in acres that need to be replanted. Even if the weather cooperated for the remainder of the growing season, the late-planted soybeans run the risk of lower yields. As a result, South American crop consultant Dr. Michael Cordonnier cut his Brazilian soybean crop by 2 MMT to 158 MMT. Cordonnier also cut his Brazilian corn crop estimate 2 MMT to 121 MMT, noting “universal agreement in Brazil that farmers will either reduce their safrinha corn acreage or plant their corn with the minimal inputs possible.” He maintains a lower bias toward both crops. Cordonnier kept his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn given improvements in weather the past couple weeks.
USDA rated 47% of the U.S. winter wheat crop as “good” to “excellent,” down three percentage points from the previous week. Traders expected no change in condition. The amount of crop rated “poor” to “very poor” held at 17%, though there was a one-point increase in the bottom category. When plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop declined 2.1 points to 318.9, while the SRW crop improved 4.4 points to 375.8. Both crops are rated well above year-ago levels, with HRW up 48.3 points and SRW up 25.4 points.
Ukraine’s grain exports through the Black Sea humanitarian corridor have reached nearly 4 MMT since it began operating in August, said Ukrainian President Volodymyr Zelenskyy. He noted the grain corridor is functioning well, and they are making positive progress. Ukraine’s grain exports as of Nov. 6 reached 9.8 MMT, according to the country’s ag ministry, down 31.5% from the same period last year.
USDA reported daily sales of 101,745 MT of corn for delivery to Mexico during the 2023-24 marketing year.
CORN: December corn futures surged on Monday, though continued to struggle against $4.77 1/4 resistance overnight, which capped most of the upside in November. This is backed by $4.80 resistance, while support lies at $4.74, then $4.69.
SOYBEANS: January soybean futures saw mild corrective selling overnight as prices near the downtrend line stemming from July highs. A close above this resistance, standing at $13.88, would be a significant technical breakout to the upside, with bulls targeting $14.00 resistance. Support can be expected at $13.65 3/4, then $13.54 1/2.
WHEAT: December SRW futures favored the downside most of the overnight session but saw increased buying activity this morning. Bulls are seeking to rally prices above the 40-day moving average at $5.82, backed by last week’s high close of $5.92 1/4. Support can be expected at $5.76 then Monday’s low of $5.67 1/4.
CATTLE: Choppy/lower.
HOGS: Higher.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone, though price action is likely to remain choppy this week ahead of Friday’s Cattle on Feed Report. Futures remain in a firm downtrend on the daily bar chart. Last week’s average cash price fell $4.98 from the prior week to $179.91 and volume was below average, indicating feedlots likely have an increased number of cattle to move this week, which could keep a lid on cash prices. Wholesale beef prices were mixed on Monday as Choice fell $2.61 to $297.85 and Select rose $1.82, though movement was light, similar to the last few Mondays.
HOGS: Lean hog futures are expected to open mostly firmer in a continuation of Monday’s technical breakout. The CME lean hog index fell another 23 cents to $76.05 (as of Nov. 10), marking a new seasonal low. The index will need to show signs of an early seasonal bottom if the rally in December futures is going to continue as the contract nears expiration, which is a month from today. Wholesale pork prices dropped on Monday, falling $2.65 to $86.77, with all cuts except bellies weakening. Pork prices continue to struggle garnering bullish momentum despite two brief breaks higher, though the downside remains limited with cutout trading below $86.40 just once this fall.
