Ahead of the Open | November 21, 2023
GRAIN CALLS
Corn: 3 to 5 cents higher.
Soybeans: 12 to 16 cents higher.
Wheat: 3 to 5 cents higher.
GENERAL COMMENTS: Corn, soybeans and wheat all favored the upside overnight, with beans continuing to lead the way higher. Traders’ focus remains on weather in Brazil, as northeast and center west Brazil lack sufficient rain in the forecast to have a lasting impact on crop conditions. Outside markets are mixed, as front-month crude oil futures favored the downside slightly in overnight trading and the U.S. dollar index traded mildly to the downside on 11-week lows.
Weather remained hot and dry over the past week with record high temperatures in central Brazil and only widely scattered showers, though southern areas continue to face heavy rains. The heat dome is breaking down this week, allowing more showers to move into central Brazil. After last week’s cut, Dr. Michael Cordonnier opted to leave his Brazilian soybean crop estimate at 158 MMT with a neutral to lower bias. He also kept his Brazilian corn crop estimate at 121 MMT with a lower bias, noting that safrinha corn acreage will decline, but by how much is still up to question. Some producers are estimating they may reduce their safrinha corn acreage by 25% to 50%. Cordonnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn, noting a slightly higher bias for soybeans though a moderately lower bias for corn.
USDA rated 48% of the U.S. winter wheat crop as “good” to “excellent,” up one percentage point from the previous week. Traders expected no change in conditions. The portion of the crop rated “poor” to “very poor” was unchanged at 17%. When plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop rose 2.0 points to 320.9, while the SRW crop declined 1.6 points to 374.2. Both crops continue to be rated well above year-ago levels.
Chinese imports of soybeans from Brazil were up 71% to 4.81 MMT from the prior October. The U.S. share of Chinese imports shrank to 228,264 MT from 772,787 a year ago. Bulk commodity imports significantly rose year-on-year in corn, barley, sugar and soybeans, though fell sharply in wheat and pork.
CORN: December corn futures traded above initial resistance of $4.72 1/2 overnight as bulls are targeting firmer resistance at $4.74 then $4.77. Bears are looking to defend the upper end of the recent sideways range and challenge support at $4.70, then $4.68.
SOYBEANS: January soybean futures continue to show strength, with prices quickly approaching downtrend resistance at $13.85 1/2, which capped nearly all gains last week. This is backed by last week’s high of $13.98 1/2. Bulls are seeking to defend support at $13.66 on another bout of selling, with backing from $13.62 1/2, then $13.51 1/4.
WHEAT: December SRW futures saw light corrective buying overnight following a seven-week low on Monday. Bulls are looking to defend yesterday’s low of $5.41, quickly backed by the contract low of $5.40. Additional support lies at $5.25. Bulls are looking to overcome initial resistance at $5.47, with backing from $5.58 3/4.
CATTLE: Lower.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a weaker tone in continuation of recent technical weakness. Last week’s cash cattle average fell $2.09 to $177.82 from $179.91 the prior week, the lowest since mid-May. Recent weakness is likely to continue, though the tightness of quality market ready cattle supplies remains limited, likely limiting the downside. Meanwhile, wholesale beef prices have continued to show relative strength, as Choice rallied $1.88 to $295.75 and Select rose 25 cents to $270.95 on Monday. If strength persists in wholesale prices, seller interest could be limited in futures.
HOGS: Lean hog futures are expected to open with a weaker tone, though technical buying could limit losses after the open. The CME lean hog index is down another 57 cents to $74.52 (as of Nov. 17), marking a new low in the seasonal decline. Persistent weakness in the index likely translates to sustained weakness in the futures market as well, as traders’ belief of an early seasonal low is waning. Wholesale pork prices slipped on Monday as well, as cutout dropped $2.07 to $86.09, near the low end of the recent sideways range. Heavy losses in bellies and picnics dragged the overall cutout value lower Monday.
