Ahead of the Open | September 11, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: 4 to 6 cents higher.
Wheat: SRW 4 to 6 cents lower; HRS 7 to 9 cents lower; HRS 5 to 7 cents lower.
GENERAL COMMENTS: Corn and soybeans saw buying overnight, bringing both markets on technical resistance into the break. SRW futures made a new contract low overnight, with wheat futures falling across the board. Outside markets are mixed, with front-month crude oil futures modestly lower despite the U.S. dollar index being down over 450 points. Winter wheat areas are expected to receive rain this week, improving planting, emergence and establishment conditions, though the Midwest is expected to continue to see net drying in the coming ten days, World Weather Inc says.
Russia will return to the Black Sea grain deal “the same day” as Moscow’s conditions for export of its grain and fertilizers are met, Foreign Minister Sergei Lavrov said. “When all the necessary actions for removing obstacles for our grain and fertilizer exports are implemented, the same day we will return to the collective implementation of the Ukrainian part of the Black Sea initiative,” Lavrov said.
House lawmakers finally return to join their Senate counterparts in a dash to get a budget deal by the deadline to prevent a government shutdown, with talk of the need for a likely short-term deal (duration is murky) if a comprehensive agreement isn’t reached. Additionally, several federal programs are up for reauthorization, including the farm bill.
A Wall Street Journal headline reads, “An important shift in Fed officials’ stance is under way.” Reporter Nick Timiraos, who is said to have close ties with the Fed, writes that Fed officials, including Chair Jay Powell, now have a more balanced approach on monetary policy. That’s a dovish shift from the more hawkish approach the Fed had in recent months, which was one of erring on the side of raising interest rates too high, to make certain inflation is choked off. Now, the Fed reportedly is more worried about further interest rate increases causing an unnecessary U.S. recession.
China’s consumer price index (CPI) posted an annual rise of 0.1% in August, which followed the first drop in consumer prices in over two years with a 0.3% decline in July. The uptick in consumer prices was primarily driven by non-food prices, which saw growth, while the cost of food continued to decrease. China’s producer price index (PPI) declined 3.0% in August, marking the 11th consecutive month of producer deflation but the smallest drop since March.
USDA reported daily sales of 185,000 MT of soybean cake and meal to the Philippines for the 2023-24 marketing year.
CORN: December corn futures bounced overnight but continued to struggle against initial resistance at $4.85. Prices have seen a series of lower highs and higher lows on the daily bar chart, awaiting a catalyst out of the current range, which will likely come in Tuesday’s Crop Production and Supply and Demand reports. Initial support stands at $4.79, while stiff resistance overhangs the market at $4.90.
SOYBEANS: November soybean futures saw buying overnight, taking the market above initial resistance and into the downward trendline from the August high, currently at $13.70. This trendline has thwarted all buying efforts since and will weigh heavily on the market today, likely capping gains until tomorrow’s reports. Support stands at $13.63, backed by stronger support at $13.58 3/4.
WHEAT: December SRW futures made a new contract low overnight as the path of least resistance remains lower, despite relative strength in the corn and soy markets. The 10-day moving average continues to bode significant resistance, currently standing at $6.04. Bulls are looking to hold the overnight low of $5.87 3/4.
CATTLE: Choppy/lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to start the week off with a mostly weaker tone as traders gear up for what’s likely to be another week of extended cash cattle negotiations. Cash trade was mixed as of Friday morning, with the average up until that point at $182.75, a quarter higher than the prior week. With futures flirting with the contract and record high close, traders will likely wait for confirmation on cash trade numbers before bidding up futures prices. Wholesale prices were mixed on Friday, with Choice rising $1.24 to $312.90 and Select falling 12 cents to $286.05.
HOGS: Lean hog futures are expected to open lower in a continuation of Friday’s weakness. While the CME cash index has rebounded slightly in the last two days, with today’s quote rising 8 cents to $86.27 (as of Sept. 7), it is uncertain if that strength will continue. Historically, the cash index sees strength in September into early October, but in the last two years the index saw sustained losses throughout that period. Wholesale prices finished Friday up $3.59, with bellies leading the way higher. Pork cutout has been volatile recently, similar to the futures market, giving little help in determining direction.
