Ahead of the Open | November 8, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 8 to 14 cents higher.
Wheat: Winter wheat 4 to 6 cents higher; HRS 1 to 3 cents higher.
GENERAL COMMENTS: Soybeans led corn and wheat higher overnight on early reports of large export sales that were confirmed this morning by USDA. Grains led commodities higher despite sustained strength in the U.S. dollar index, which is around 230 points higher to start the day. Front-month crude oil futures continue to slide and are trading on three and a half month lows. Bonds are relatively quiet to start the day, but the 10-year treasury yield remains near four-week lows.
This morning, USDA reported daily sales of 433,000 MT of soybeans for delivery to China during the 2023-24 marketing year, marking the largest single day purchase since late July. This confirmed a Reuters report that 10 cargoes were purchased from Gulf and Pacific Northwest terminals yesterday. Cash premiums for U.S. soybeans at Gulf Coast terminals jumped by as much as 10 cents a bushel on Tuesday as exporters scrambled to source supplies, traders said.
USDA also reported sales of 132,000 MT of soybeans for delivery to unknown destinations, another daily sale of 344,500 MT of soybeans for delivery to unknown destinations, and 270,000 MT of corn for delivery to Mexico, all during the 2023-24 marketing year.
The U.S. exported $12.73 billion of ag goods in September, while ag imports totaled $15.34 billion. This resulted in a monthly trade deficit of $2.61 billion, falling from $3.62 billion in August but the fifth consecutive month of red ink. The U.S. ag sector concluded fiscal year (FY) 2023 with a record trade deficit, as exports reached $178.75 billion, while imports soared to a record $195.37 billion, resulting in a trade gap of $16.62 billion. Still, it was a better outcome than initially anticipated by USDA, as exports exceeded its forecast of $177.5 billion, while imports fell short of the projected $196.5 billion level that would have resulted in a $19 billion deficit.
The U.S. trade deficit widened to $61.5 billion in September from an upwardly revised $58.7 billion gap in August. Still, it is the third lowest trade deficit since 2021. Imports were up 2.7% to $322.7 billion, the highest level in seven months. Exports rose at a slower 2.2% to $261.1 billion, the highest level since August 2022.
CORN: December corn futures saw sympathy gains from the soybean market overnight, bringing prices back to the $4.74 level, which currently stands as initial resistance. Continued strength has bulls targeting resistance at $4.76, then the $4.80 mark. Bulls continue to defend the downside well, as the Sept. 19 low of $4.67 3/4 has yet to be broken. Additional support stands at $4.70 on the way.
SOYBEANS: January soybean futures surged higher overnight, taking out yesterday’s for-the-move high of $13.80 before facing corrective selling. This will stand as initial resistance and is backed by significant downtrend line resistance stemming from the July highs at $13.90. Bulls are seeking to hold support at $13.69 3/4 then $13.56 3/4 on corrective selling, though prices remain well extended over 10-day moving average support at $13.42 3/4, leaving room for additional selling pressure on a near-term reversal.
WHEAT: December SRW futures surged overnight following a volatile session on Tuesday. Bulls are eyeing a close above the 40-day moving average, currently at $5.82, as that level has capped nearly all of the rally seen in October. Additional resistance lies at $5.86, then $5.94 1/2. Bulls are seeking to hold support at $5.73 1/4, then $5.64 1/2 on a bout of profit-taking.
CATTLE: Lower.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open lower in a continuation of Tuesday’s selloff. No active cash cattle trade has taken place thus far this week apart from minimal sales on Monday at $181.00 in Iowa. Wholesale beef prices continue to slip as well, as Choice fell $1.34 to $300.38 and Select dipped 88 cents to $269.48 on Monday. While much of Tuesday's steep drop can be attributed to overall commodity market weakness, bulls are helped little by weakening cash fundamentals and a deteriorating technicals. The U.S. dollar index remains strong and crude oil continues to slip, which gives potential for sustained commodity market weakness today.
HOGS: Lean hog futures are expected to open mostly higher on continued technical buying, supported by signs of stabilization in the CME lean hog index. The index firmed 4 cents to $76.27 today (as of Nov. 6), marking the first uptick since Oct. 11. This gives confidence to traders and affirms their belief that the index could see an earlier seasonal bottom than the past few years. December futures continue in a tight uptrend on the daily bar chart, with little space between current prices and uptrend line support. This opens the door for a technical breakdown if seller interest is active. Wholesale pork prices gave up most of Monday’s gain, as cutout fell $3.84 to $87.77, led by a $14.64 drop in bellies, though all cuts but ribs saw losses. Loads improved from Monday’s depressed figure to an impressive 351.38 loads.
