Ahead of the Open | September 13, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 2 to 4 cents higher.
Wheat: Winter wheat 7 to 9 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Grains were mixed overnight, though all finished higher into the break. Wheat led the way higher amidst short covering. U.S. core inflation came in higher than expected this morning, which sent the U.S. dollar index off overnight highs and could lead to volatile trade this morning after the open. Front-month crude oil continues to show strength as prices are trading on recent highs.
Ukraine exported 783,000 MT of grain in the Sept. 1-13 period, according to the country’s ag ministry, down sharply from around 1.5 MMT of shipments during the same period last year. Traders and exporters have said Ukrainian Black Sea ports being blocked and recent Russian attacks on Ukrainian ports on the Danube River are the main reasons for the reduced exports.
Hungary has agreed with Poland, Romania, Slovakia and Bulgaria that the five countries would impose national bans on Ukrainian grain imports to protect their markets if the EU does not extend a ban that expires on Sept. 15. Hungary’s ag minister said any new national ban would apply to a wider range of Ukrainian products than the current measures.
France’s ag ministry lowered its forecast for 2023-24 French wheat exports outside the EU trade bloc by 100,000 MT to 9.5 MMT, which would be down 6.4% from the previous marketing year. The outlook for wheat exports within the EU was reduced 250,000 MT to 7.54 MMT, though that would still be 18.1% higher than 2022-23.
Tuesday at an event hosted by the ethanol lobby group Growth Energy, USDA Secretary Tom Vilsack urged ethanol producers to focus on reducing greenhouse gas emissions and seizing opportunities in the growing market for low-polluting jet fuel. “This is a critical moment — a make-or-break moment,” Vilsack said, according to Bloomberg. The industry’s future is closely tied to sustainable aviation fuel (SAF), with a potential 36-billion-gallon industry on the horizon.
CORN: December corn futures matched the August 16 low after the report yesterday, marking $4.73 1/2 as critical support. Bulls are targeting initial resistance at $4.82 1/2 before tackling the downtrend from August highs at $4.85. Prices continue to trade in a narrow range, a close below $4.73 1/2 likely changes that.
SOYBEANS: November soybean futures continue to trend lower, though were supported by downtrend line support after Tuesday’s reports and overnight. A daily close below $13.40 support would likely accelerate selling pressure into $13.25 support. Bulls are targeting resistance at $13.57, backed by $13.65.
WHEAT: December SRW futures continued Tuesday’s rebound from a fresh contract low overnight. Futures have quickly returned to initial resistance at the 10-day moving average (currently at $5.99), a level that has capped nearly all the upside over the past month. A daily close above $6.00 would indicate an interim low is likely in place, targeting $6.27 resistance. Bulls are looking to hold $5.85 support if prices turn lower after the break.
CATTLE: Mixed.
HOGS: Choppy/lower.
CATTLE: Live cattle futures are expected to continue consolidating near contract highs. With no cash trade taking place thus far this week, traders are awaiting a catalyst to fuel prices higher. Wholesale prices have recently turned lower, with Choice down $2.08 to $308.03 and Select falling $1.66 to $283.78, which may weigh on futures prices today. The recent weakness is tightening packer margins, which is not encouraging them to raise cash cattle bids.
HOGS: Lean hog futures are expected to open mostly lower after surging the past two days into technical resistance. While futures are at resistance, the CME lean hog index continues to stabilize above $86.00, as today’s quote slid just 4 cents to $86.13 (as of Sept. 11). Pork cutout has shown relative strength recently as well, with Tuesday’s quote rising $1.75 to $101.20, closing above the $100.00 level for the first time since Aug. 24. The strength in wholesale values should encourage packers to boost their bids for slaughter hogs, giving way for a cash market rally into mid-October.
