Ahead of the Open | September 12, 2023
GRAIN CALLS
Corn: 1 to 2 cents lower.
Soybeans: 3 to 5 cents lower.
Wheat: Winter wheat futures 2 to 4 cents lower; HRS steady to 2 cents higher.
GENERAL COMMENTS: Grain bulls struggled to garner momentum overnight, though most trade is likely positioning ahead of today’s USDA reports. Eyes will be on production numbers, which include the first objective look into this year’s yields and a likely increase to planted acres in corn. Restricted rainfall across the Midwest will help in maturing the crop and provide favorable harvesting conditions, World Weather Inc says. Outside markets are mixed, with front-month crude oil futures over $1 higher near 9-month highs and the U.S. dollar index over 300 points higher.
Analysts expect USDA to cut its corn and soybean crop estimates in the Crop Production Report at 11:00 a.m. CT. The September crop estimates will include USDA’s first objective yield (field) samples for corn and soybeans. NASS will also adjust acreage if needed. Based on FSA data, we expect an increase in corn acres and little change for soybeans. FSA data suggests NASS will cut cotton acreage and abandonment is also expected to rise. That could produce a cotton crop estimate well below the initial forecast in August. Given the expectations for smaller crop estimates, traders anticipate USDA will also cut its new-crop ending stocks forecasts.
Crop consultant Dr. Michael Cordonnier trimmed his soybean yield 0.5 bu. to 49.5 bu. per acre, noting hot and dry conditions sped up maturation of soybeans, especially in drier areas of the western Corn Belt. That lowered his soybean production estimate to 4.08 billion bushels. Cordonnier left his corn yield and production estimates at 173 bu. per acre and 15.01 billion bu., respectively, though he has a neutral to lower bias toward the crop.
USDA rated 52% of the corn crop as “good” to “excellent,” down one percentage point from the previous week and in line with expectations. The portion of crop rated “poor” to “very poor” held at 18%. USDA rated 52% of the soybean crop as “good” to “excellent,” down on point from last week. Traders expected a two-point decline. The amount of crop rated “poor” to “very poor” increased one point to 18%. When USDA’s weekly condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (CCI; 0 to 500-point scale, with 500 representing perfect), the corn crop dropped 1.0 point to 336.1, which as 4.1 points (1.2%) below last year on this date. The soybean crop fell 2.1 points to 333.4, which was 8.8 points (2.6%) below last year.
CORN: December corn futures are nearing the end of the tightening pattern seen on the daily bar chart. The pattern puts resistance at $4.85 and support at $4.79 1/2, levels that are almost certainly violated today as price action is spurred by the USDA reports at 11 a.m. CT. Additional resistance stands at $4.88 1/4 then $4.97 1/2, while additional support stands at $4.76 3/4 then $4.73 1/2.
SOYBEANS: November soybean futures gave up most of Monday’s gains overnight as prices continue to struggle against downtrend resistance. Today’s reports will provide a catalyst, bulls are seeking a daily close above $13.72, negating the recent downtrend. Bears are seeking to keep futures below $14.00. Bulls are seeking to keep prices above $13.52 1/2, backed by $13.45.
WHEAT: December SRW futures made a new contract low overnight, marking the third day in a row of new lows. While the overall trend remains bearish, some corrective buying is likely before the end of the week, though today’s price action will be largely dictated by the USDA reports. The reports may not be overtly directional for wheat itself, as the September report generally does not have significant adjustments in wheat, but spillover strength/weakness is likely from corn and soybeans. Support can be expected by the overnight low at $5.80 1/2 and is backed by $5.575, while resistance can be expected at $5.98 3/4.
CATTLE: Mixed.
HOGS: Choppy/weaker.
CATTLE: Live cattle futures are expected to mixed as futures traders wait for cash trade to develop in the latter half of the week. Cash cattle averaged $182.28 last week, down 22 cents from the previous week, marking the fifth straight weekly decline. The weekly declines have waned in the last few weeks, and futures contracts in contango point to anticipated increases in the cash market over the next eight months. As October futures are currently nearly $2 over last week’s cash average points to the bullish bias, which will likely become a reality as packers run short on purchases. Bearish for cattle futures remains cutout, as Choice fell $2.79 on Monday to $310.11 and Select fell 61 cents to $285.44.
HOGS: Lean hog futures are expected to open mostly weaker, continuing the recent volatile trend. The CME lean hog index has stabilized for the most part but fell a dime to $86.17 in today’s quote (as of Sep. 8). Sustained weakness will quickly reverse recent bullish momentum, as traders seemingly expect the cash index to rally over the coming four to five weeks before resuming the seasonal decline into the holidays. Cutout prices fell from midsession, but still rose $1.65 on the day, led by strength in bellies, posting the highest close since Aug 24.
