Ahead of the Open | October 31, 2023
GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents higher.
Wheat: Winter wheat 6 to 8 cents lower; HRS 4 to 6 cents lower.
GENERAL COMMENTS: Corn and soybeans traded on both sides of unchanged overnight and went into the break near Monday’s settlement, while wheat futures favored the downside. Outside markets were mixed as front-month crude oil futures were modestly stronger and the U.S. dollar index surged this morning and is trading around 200 points higher.
This morning, USDA reported daily sales of 239,492 MT of soybeans for delivery to Mexico during the 2023-24 marketing year.
South American consultant Dr. Michael Cordonnier says it’s been a tale of two extremes for weather early in the growing season in Brazil, as east-central and northeastern areas too hot and dry while southern areas have been inundated with too much rain. Cordonnier cut his Brazilian soybean and corn crop estimates 2 MMT each to 160 MMT and 123 MMT, respectively, while maintaining lower biases. For soybeans, he noted: “Any soybeans planted, or replanted, from this point forward run an increased risk of lower yields especially if the weather remains erratic in east-central and northeastern Brazil.” For corn, he cited “what probably will be lower safrinha corn acreage than originally expected” given soybean planting delays and the need for some replanting. Cordonnier kept is Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn.
USDA’s first winter wheat crop conditions ratings of the season pegged 47% of the crop as “good” to excellent,” equal to pre-report expectations. The portion of crop rated “poor” to “very poor” stood at 18%. Last year’s initial winter wheat crop ratings were 28% “good” to “excellent” and 35% “poor” to “very poor.” When USDA’s initial crop condition ratings of the season are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop stood at a 318.7 reading, 52.9 points above last year but 2.1 points below the five-year average. The SRW crop started the growing season with a 369.9 CCI rating, 22.0 points above last year and 12.8 points higher than the five-year average.
Euro zone consumer inflation declined to an annualized 2.9% in October, the lowest level since July 2021. Core inflation, which filters out food and energy prices, cooled to 4.2%, marking its lowest point since July 2022. The initial estimate of third quarter GDP for the bloc expanded 0.1% from year-ago, while contracting 0.1% on a quarterly basis.
CORN: December corn futures traded in a narrow range overnight as nearby support at last week’s low of $4.76 3/4 provided little bounce thus far. This support is firmly backed by $4.74, which has captured most of the downside since August. Bears are seeking to defend resistance of $4.80 1/2 on a bounce, which is backed by $4.83 1/2.
SOYBEANS: November soybean futures broke below uptrend support in overnight trading, which currently stands at $12.83 1/2. Bulls need to break back above this level after the open to negate a technical breakdown on the daily bar chart. Further resistance lies at $12.88 1/4, then $12.97. Bulls are seeking to hold prices above support at $12.79 1/2, backed by the $12.75 mark, then $12.71.
WHEAT: December SRW futures continue to slide despite crop ratings coming in below average. Prices appear to be seeking to retest the contract low of $5.40 made in September, with additional support at $5.55 1/2 and $5.47 1/4 on the way. Bulls are seeking to recapture initial resistance at $5.63 1/4, backed by the 10-day moving average at $5.72 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone as cash fundamentals continue to strengthen. Despite early weakness last week, cash cattle prices firmed to average $184.02, though that still marked a $2.13 drop from the prior week. That encouraged bulls to continue last week’s price recovery in futures, though bears defended the gap from last Monday, which could pressure futures today. Wholesale beef prices firmed Monday, as Choice rose $1.71 to $309.28 (the highest since mid-September), while Select rose 77 cents to $280.89. While prices firmed, movement was weak at just 59 loads.
HOGS: Lean hog futures are expected to open mostly lower, continuing yesterday afternoon’s weakness. The CME lean hog index continues to fall seasonally, dropping 44 cents to $77.51 today (as of Oct. 27), leaving December futures just $6.335 under the index. This is the tightest spread since May and the contract does not cash settle against the index for another six weeks. Historically, the index falls until the December contract expires and is showing little signs of an early bottom. The strengthening wholesale market may limit selling interest after the open, as pork cutout firmed $1.46 on Monday to $87.86 with gains in all cuts apart from loins and ribs.
