Ahead of the Open | November 28, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 5 to 8 cents higher.
Wheat: Winter wheat 1 to 3 cents higher; HRS 2 to 5 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat each saw corrective buying overnight with soybeans leading the way higher. Corn and wheat continue to struggle garnering much bullish momentum despite both markets being oversold. Outside markets are supportive, as front-month crude oil futures are seeing mild gains and the U.S. dollar index is trading over 150 points lower to start the day.
This morning, USDA reported daily sales of 123,300 MT of soybeans for delivery to unknown destinations for the 2023-24 marketing year.
There has been enough recent rainfall across central and northeastern Brazil for South American crop consultant Dr. Michael Cordonnier to keep his Brazilian crop estimates at 158 MMT for soybeans and 121 MMT for corn. However, he maintained his lower bias toward both crops, noting heavier and better coverage of rainfall will be needed. Cordonnier kept his Argentine estimates at 50 MMT for soybeans and 52 MMT for corn. He has a neutral-to-higher bias for the Argentine soybean crop and neutral-to-lower bias toward corn.
As of Sunday, USDA rated 50% of the U.S. winter wheat crop as “good” to “excellent,” up two percentage points from the previous week. Traders expected a one-point increase. The amount of crop rated “poor” to “very poor” declined two points to 15%. This marked USDA’s final national crop ratings until April 1, 2024. When plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.5 points to 323.3, while the SRW crop declined 2.5 points to 371.6. The final CCI rating ahead of dormancy was equal to the five-year average for HRW and 14.8 points above average for SRW.
Russia might impose a ban on grain exports if their stocks fall to 10 million tons, Izvestia daily reported, citing a government document. The government working group on non-tariff measures in foreign trade recommended the ag ministry monitor grain stocks on monthly basis, Izvestia reported. If the monitoring shows stocks decrease to a “critically low level” of 10 MMT the ministry should impose a temporary ban on exports. The ag ministry confirmed the Izvestia report, however, it pointed out Russia has ample grain reserves given large stocks remaining from last year and this year’s big harvest. The ag ministry reiterated it expects Russia’s grain exports to top 65 MMT during 2023-24.
CORN: December corn futures saw tepid buying overnight following Monday’s for-the-move low. Bulls are looking to hold support at $4.53 3/4, quickly backed by $4.52 1/4, then the psychological $4.50 level. Bears are seeking to defend resistance at $4.61 on corrective buying, which is backed by the 10-day moving average at $4.65 1/4.
SOYBEANS: January soybean futures led the ag complex higher overnight, maintaining initial support at $13.28. Additional support lies at $13.19 1/2. Bulls are targeting resistance at $13.40 3/4 then the 20-day moving average at $13.46 3/4. Bulls are ultimately seeking a daily close above resistance at $13.70 to bring an end to the recent downturn.
WHEAT: December SRW futures saw muted volatility overnight after making a fresh contract low on Monday. Bulls are looking to keep prices above $5.34 1/4 with backing from $5.27 1/4. Bears are looking to defend resistance at $5.43 1/2 then $5.50 on a bout of corrective buying.
CATTLE: Choppy/lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone, though corrective buying could limit losses as the market is heavily oversold. Several times over the past two months, live cattle futures and feeder futures alike have seen a couple days of harsh selling followed by corrective buying. This points to a potential bounce, though that could be short- lived. Last week’s average cash price fell $1.05 from the prior week to $176.77 and weaker trade is likely to take place once again this week. Wholesale beef prices were weak on Monday, as Choice fell 78 cents to $297.25 and Select dropped 96 cents to $267.80.
HOGS: Lean hog futures are expected to open mostly lower, though strength in nearby December futures and surging wholesale pork prices could limit losses. The CME lean hog index is down $1.27 to $72.33 (as of Nov. 24), marking the biggest daily decline since Sept. 1. February futures fell below December futures for the first time, pointing out that traders think sustained weakness will persist beyond the usual seasonal bottom in early winter. Wholesale pork prices surged on Monday, as cutout rose $4.58 to $88.75, though strength was led by volatile bellies, so it is likely some of those gains will be given up today.
