Ahead of the Open | October 10, 2023
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 3 to 6 cents lower.
Wheat: Winter wheat 9 to 11 cents lower; HRS 6 to 10 cents lower.
GENERAL COMMENTS: Corn and soybeans favored the downside overnight but saw limited ranges in continuation of Monday’s selling pressure. Wheat saw sharp losses a price broke down technically. Outside markets were relatively quite overnight, though the bond market turned lower after a bounce on Monday, as the 10-year treasury is currently fetching 4.7%. Front-month crude oil futures are modestly lower and the U.S. dollar index is around 120 points lower.
In its first forecast for 2023-24, Conab projects Brazilian soybean production will increase 4.8% to a record 162.0 MMT. Soybean plantings are expected to rise 2.5% to 45.1 million hectares. Conab forecasts corn production will fall 9.5% from the 2022-23 record to 119.4 MMT amid a 4.8% drop in plantings and lower yields.
Israeli Defense Forces (IDF) reported the discovery of the bodies of 1,500 Hamas militants within Israeli territory, marking a significant development in the conflict in the Gaza region. Israel stated it has regained control of the border with Gaza and reported no recent incursions over the past day. Earlier, Hamas issued a threat, stating its intention to execute Israeli captives if Israel continued to carry out airstrikes on civilian houses in Gaza without prior warning. These statements heightened tensions in the already volatile region. Reports from Gaza officials indicate that the airstrikes have resulted in the deaths of at least 700 Palestinians, while in Israel, at least 900 people have been killed by militants from Gaza. Market responses to the conflict have been relatively muted.
The International Monetary Fund (IMF) left its forecast for global GDP growth in 2023 unchanged at 3.0%, though that would be down from 3.5% growth last year. IMF cut its 2024 forecast by 0.1 percentage point to 2.9%. Cuts to the economic outlooks for China and euro zone were offset by “remarkable strength” in the U.S. economy. IMF raised its 2023 GDP forecast for the U.S. to 2.1%, up 0.3 point from its prior outlook. The outlook for China’s economy was cut 0.2 point to 5.0%, while the euro zone is now expected to grow 0.7%, down 0.2 point from the prior projection. “The global economy is showing resilience. It’s not knocked out by the big shocks it’s experienced in the last two or three years, but it’s not doing too great either,” IMF chief economist Pierre-Olivier Gourinchas told Reuters. “We see a global economy that is limping along and it's not quite sprinting yet.” Inflation continued to decline around the globe due to a fall in energy prices and to a lesser extent food prices. IMF forecasts inflation to fall to 6.9% in 2023, down from 8.7% in 2022, and to 5.8% in 2024. Core inflation, excluding food and energy prices, is coming down more gradually, and should drop to 6.3% in 2023, from 6.4% in 2022, and to 5.3% in 2024, IMF said.
Top United Nations trade official Rebeca Grynspan met with Russian officials in Moscow on Monday for talks aimed at enabling the “unimpeded access” to global markets for grain and fertilizer from Russia and Ukraine. UN aid chief Martin Griffiths also attended the meetings virtually, UN spokesperson Stephane Dujarric said. UN Secretary-General Antonio Guterres “continues in his determination to facilitate the unimpeded access to global markets for food products and fertilizers from both Ukraine and the Russian Federation,” Dujarric said.
CORN: December corn futures are in an uptrend on the daily bar chart though prices remain volatile and lack definite direction. Bulls failed to hold support at the 40-day moving average Monday, marking $4.89 as initial resistance, backed $4.97 1/2. Bulls are seeking to hold initial resistance of $4.85 3/4 with firmer backing at $4.81.
SOYBEANS: November soybean futures made a for-the-move low overnight. Bulls bounced from support of $12.54 3/4 overnight, retaking support at $12.56 3/4. Additional selling is likely to find support at $12.47 1/2. Bulls are targeting initial resistance of $12.77 1/2, backed by $12.83 1/2. Prices are nearing oversold, but that selling is likely to continue until bulls can retake any meaningful resistance.
WHEAT: December SRW futures struggled to hold onto geopolitically driven gains on Monday and have given all those gains up now. Prices have turned sharply lower, breaking a six-day uptrend on the daily bar chart. This support turned resistance will be bulls first target today, standing at $5.73 1/2, quickly backed by $5.77 1/2. Initial support stands at $5.60 1/2 and is backed by $5.51 3/4 then the contract low of $5.40.
CATTLE: Mixed.
HOGS: Lower.
CATTLE: Live cattle futures are expected to continue recent volatility as choppy trade is likely to continue. The rebound in wholesale beef prices continued Monday, as Choice rose $1.41 to $303.42 and Select firmed $1.72 to $277.50. While rising wholesale prices will help packer margins, they remain in the red and the volume that packers purchased in negotiated trade last week is likely to limit cattle demand this week. Packers purchased 95,000 head in negotiated trade, the largest volume since June.
HOGS: Lean hog futures are expected to open mostly lower amid weakening cash prices and technical-based selling. The CME lean hog index is down another 57 cents today to $84.76 (as of Oct. 6), extending its seasonal slide. Strength in wholesale pork prices, which saw a $1.84 gain to $95.06 Monday, might limit seller interest. Bellies surged $13.39 on the day. Movement was fairly light at 234.06 loads.
