Ahead of the Open | August 31, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 1 to 3 cents lower.
Wheat: SRW 4 to 8 cents lower; HRW 8 to 12 cents lower; HRW 4 to 6 cents lower.
GENERAL COMMENTS: Corn futures posted modest corrective gains overnight, while soybeans and wheat finished the session under pressure. Weekly export sales were about as expected and won’t appreciably impact price action this morning. Outside markets are sending mixed signals with crude oil nearly $1.00 higher and the U.S. dollar index up more than 350 points.
USDA reported daily soybean sales of 132,000 MT to China for 2023-24. That marks the fifth trading day in a row with daily soybean sales to China or unknown, totaling 1.061 MMT over that period.
Forecasts continue to call for hot and dry conditions across the Corn Belt, Plains and Delta for the next one to two weeks. Cooling is expected in the central U.S. during mid- to late September with a boost in shower activity occurring with the multiple cool fronts, though rainfall may continue lighter than usual.
Hurricane Idalia, which has been downgraded to a tropical storm and is moving off the Carolina coast, left behind flooding rains and high winds. World Weather Inc. says, “Some lodging of cotton and corn may have occurred, although much of the corn crop had already been harvested from the most negatively impacted areas in Florida and Georgia. The most concentrated area of cotton is produced northwest of where the greatest wind occurred, which should have also helped to spare much of that crop from damage. Much of the rainfall that occurred in cotton areas of Georgia, Alabama and Florida was welcome because of the recent bouts of heat and moisture stress that was impacting the crop. Not only was that the case for cotton, but also for peanuts and soybeans. Since most of the cotton is produced northwest of where the greatest rain fell flooding was minimal in key production areas and mostly the moisture will prove to be highly beneficial.”
Today marks the start of the delivery process for September grain contracts. There were no deliveries against September corn, soybeans, soymeal, or soyoil. There were deliveries of 1,113 contracts of SRW wheat and 168 contracts of HRW wheat.
Export sales for the week ended Aug. 24:
Corn: Net sales of 71,700 MT for 2022-23. Net sales of 991,800 MT for 2023-24. Traders expected (150,000) to 150,000 MT for 2022-23 and 400,000 MT to 1.1 MMT for 2023-24.
Soybeans: Net sales reductions of 50,700 MT for 2022-23 – a marketing-year low. Net sales of 1.1 MMT for 2023-24 were led by unknown destinations (399,400 MT) and China (392,500 MT). Traders expected 50,000 to 300,000 MT for 2022-23 and 600,000 to 1.4 MMT for 2023-24.
Wheat: Net sales of 329,100 MT for 2023-24, down 19% from the previous week and 25% below the four-week average. China was the lead buyer at 110,000 MT. Traders expected 250,000 to 700,000 MT for 2023-24.
CORN: December corn futures pivoted around unchanged in light trade overnight and remain in the short-term consolidation range around the recent lows. Near-term trading boundaries are established at this month’s low of $4.73 1/2 and the Aug. 11 high at $5.07 1/2.
SOYBEANS: November soybean futures bounced from Wednesday’s low of $13.80 1/2 during overnight trade. That level will be initial support, followed by the 10-day moving average near $13.75 1/2. Near-term resistance extends from the 5-day moving average near $13.92 to Monday’s high at $14.09 1/2.
WHEAT: December SRW futures were unable to build on Wednesday’s corrective gains overnight and posted a new contract low while dipping below $6.00. Support is now at psychological levels every 25 cents lower from there. resistance is heavily layered from $6.08 1/4 to $6.46 1/4.
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone after a poor close on Wednesday. That could produce some technical-based selling, though the downside should be limited by the discount futures hold to the cash market. Cash cattle negotiations have been limited so far this week, with packers not actively bidding for cattle and feedlots patiently waiting. With a three-day weekend ahead, it’s conceivable both sides will play it close to the vest and decide to reevaluate their situations after the holiday weekend. Choice boxed beef firmed 75 cents on Wednesday, while Select slipped 15 cents. USDA reported net beef sales of 18,200 MT for 2023, up 59% from the previous week and 35% higher than the four-week average.
HOGS: Lean hog futures are expected to open with a mostly firmer tone after big bullish reversals on Wednesday. But with the cash index accelerating its seasonal decline, selling pressure is likely if early buyer interest is limited. The CME lean hog index is down another $1.74 to $90.67, marking the biggest daily decline since prices started their seasonal drop in late July. During that span, the cash index has fallen $15.33. Because of the steep discounts traders had built in, October hog futures have so far weathered the storm, falling only $1.425 during the same period. USDA did not report afternoon wholesale pork trade due to packer submission problems. The pork cutout slipped 26 cents Wednesday morning. USDA reported net pork sales of 36,900 MT for 2023, up 12% from the previous week and 45% higher than the four-week average.
