Ahead of the Open | September 18, 2023
GRAIN CALLS
Corn: Steady to 2 cents higher.
Soybeans: Steady to 2 cents higher.
Wheat: SRW 4 to 6 cents lower; HRW 6 to 8 cents lower; HRW 3 to 5 cents lower.
GENERAL COMMENTS: Wheat futures led overnight weakness, though corn recovered to unchanged at the break. Soybeans recovered from overnight lows but are still facing losses, though a daily export sale of 123,000 MT to China for the 2023-24 marketing year might encourage bulls. The U.S. dollar index is trading near unchanged, though front-month crude oil futures are trading near Nov. 2022 highs.
American and Chinese officials met over the weekend, the meetings aimed to make sure that Xi and President Biden were positioned to meet at the APEC summit in San Francisco this November. The report showed that both parties believe both sides have an interest in stabilizing ties. China’s leaders are focused on the country’s economic downturn, while US leaders are hoping for stabilized ties ahead of the 2024 presidential election.
Two cargo vessels arrived in Ukraine on Saturday, the first ships to use a temporary corridor to sail into Black Sea ports and load grain for African and Asian markets. The Ukrainian Sea Ports Authority said bulk carriers “Resilient Africa” and “Aroyat” had arrived in the port of Chernomorsk. They were due to load almost 20,000 MT of wheat for Africa and Asia.
Ukraine will file a complaint to the World Trade Organization over an import ban of its grain into Poland, Hungary and Slovakia “in several hours,” according to Deputy Economy Minister Taras Kachka. Kyiv also plans to retaliate with its own bans on imports of several products if the neighboring countries don’t scrap similar restrictions and may target goods such as onions and apples from Poland and cars from Hungary, Kachka said.
Work will continue in Washington on trying to get a fiscal year 2024 spending measure or a continuing resolution (CR) to temporarily fund the government from Oct. 1. A group of six House Republicans on Sunday unveiled a proposal to temporarily fund the government in a bid to prevent a shutdown at the end of the month. The plan calls for funding until Oct. 31, with a 1% cut to current fiscal levels, excluding the Defense Department and Veterans Affairs, while the rest of the government would see an immediate 8% cut until the end of October. It is uncertain whether it will gain enough support to pass in the House and survive an anticipated rejection in the Senate. Many lawmakers are anticipating at least a brief government shutdown.
CORN: December corn futures’ range continues to tighten on the daily bar chart. Make or break support stands at the August and September low at $4.73 1/2, loss of which likely triggers selling to $4.65. Bulls are seeking a daily close above $4.81, which would negate the downtrend from the Aug. 21 highs, though additional buying would be needed to affirm that an interim low is in place.
SOYBEANS: November soybean futures continue to trade in a tight, steep downtrend on the daily bar chart. Prices are nearing the lower end of the recent range, so corrective buying is possible. Support can be found at $13.30, backed by $13.26 1/2. Resistance can be expected at $13.53 1/2.
WHEAT: December SRW futures showed impressive strength on Friday but have since showed sustained weakness. If bears follow-through on the open, it would indicate a false breakout and new contract lows would be likely. First support stands at $5.87, backed by the contract low at $5.70. Resistance stands at $5.98 3/4, then $6.07 1/2.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to start the week off mostly higher, though some profit-taking is possible after back-to-back sessions of all-time highs in front-month futures. Last week’s cash average is expected to come in sharply higher from the prior week, though still fall short of the all-time high posted during summer. Sustained strength in the cash market will be key in futures, which is likely as packers appear to be short-bought on near-term slaughter needs. Recent weakness in wholesale prices may hinder bulls’ efforts, with Choice falling 66 cents to $305.71 and Select falling $3.74 to $283.12 on Friday.
HOGS: Lean hog futures are expected to open mostly higher as prices are likely to bounce off technical support to start the week. The CME lean hog index continues to base as today’s quote slipped 1 cent to $86.93, though it gained last week. Pork cutout fell 26 cents on Friday to $98.83, led by losses in picnics. While the fundamentals are not overtly bullish, the $3.805 discount that October futures hold to the CME lean hog index should keep excessive selling pressure at bay.
