GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: Steady to 2 cents higher.
Wheat: 3 to 5 cents lower.
GENERAL COMMENTS: Corn and soybeans did not stray far from unchanged in the overnight session while wheat gave up a chunk of yesterday’s gain. Eyes remain on the soy complex as prices are consolidating in an apparent bearish formation on the daily bar chart. Outside markets are supportive this morning as front-month crude oil futures continue to work higher while the U.S. dollar index is around 200 points lower.
The personal consumption expenditures price index (PCE inflation) rose 0.3% in August, in line with expectations but up from 0.2% in July. Prices for goods rose 0.1% while services continue to lead PCE higher, rising 0.3%. On an annual basis, PCE rose 2.7%, the highest in six months. Core PCE, which excludes food and energy, rose 0.2% in August. Annual core PCE, the Fed’s preferred inflation gauge, held steady at 2.9%, still above the group’s target.
Argentina’s Treasury is moving to scoop up large amounts of foreign currency in block trades just as $7 billion from grain exports enters the market, according to three people with direct knowledge of the matter and reported by Bloomberg. “Central bank officials have contacted the trading desks at major financial institutions on behalf of the Treasury, asking to be notified whenever a client posts a sizable dollar-sale order, the people said, requesting anonymity to discuss private conversations with Argentine officials.” The Argentine Treasury aims to buy those dollars directly from sellers to prevent large inflows from strengthening the peso excessively. Argentina’s currency market has been flooded by dollars from grain exporters rushing to take advantage of a temporary tax holiday.
The U.S. dollar index on Thursday posted solid gains and hit a four-week high in the wake of an upbeat U.S. GDP report that was better than market expectations. The GDP report and other recent U.S. data are forcing traders to reassess the Federal Reserve’s trajectory for interest-rate cuts, with attention turning to today’s PCE inflation report. Having nearly priced in two quarter-point Fed rate cuts by year-end, the marketplace now sees the odds of that closer to 50-50. “The data serve as a warning sign for the Fed,” Danske Bank strategists wrote in a note, predicting the U.S. dollar and short-end Treasury yields could continue to climb in the near term. “With growth momentum proving stronger than expected, market focus could swing back to the inflation mandate.”
CORN: December corn is toggling on either side of key resistance at $4.25. Additional strength eyes resistance at $4.30 while selling pressure finds support at $4.21 3/4.
SOYBEANS: November soybeans continue to consolidate sideways in an apparent bear-flag on the daily bar chart. Support stands at $10.05 on weakness while bulls are seeking to overcome Wednesday’s high of $10.20 1/4.
WHEAT: December SRW wheat saw profit-taking overnight. Bulls are seeking to hold prices above support at $5.22 1/2 on persistent selling pressure while bulls are seeking to topple resistance at $5.30 on a reversal higher.
LIVESTOCK CALLS
CATTLE: Choppy/higher.
HOGS: Higher.
CATTLE: Cattle futures are expected to open with a mostly firmer tone as technical strength encourages bulls. The persistent weakness in wholesale beef could limit buying interest after the open. Choice cutout is down another $5,42 to $371.97 while Select sunk $2.97 to $353.45. That weakness has pushed packer margins deep into the red, which has limited cash negotiations this week.
HOGS: Lean hog futures are expected to open higher in a continuation of recent strength. The hog herd coming in modestly smaller than expected in yesterday’s Hogs & Pigs Report could fuel gains after the open. Details can be found in FTT here. The CME lean hog index is up another 6 cents to $105.06 as of Sept. 24. Pork cutout is down another 64 cents to $110.99, led by losses in loins.