Ahead of the Open | September 20, 2023
GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 2 to 5 cents higher.
Wheat: Winter wheat 5 to 7 cents higher; HRS 4 to 6 cents higher.
GENERAL COMMENTS: Grains saw followthrough buying from Tuesday’s lows overnight and went into the break higher, though recent volatility is likely to continue after the open. The Federal Reserve will announce their interest rate decision this afternoon, which will likely spark volatility in outside markets. Front-month crude oil futures have pulled back from ten-month highs, breaking a seven-session streak higher. The U.S. dollar index continues to consolidate near six-month highs, despite a recent resurgence in treasury yields.
Russia’s ag minister says he expects the country to export 60 MMT of grain this year. Wheat will account for the bulk of that total, though he didn’t give a specific wheat export figure. He noted the country has harvested 123 MMT of grain out of an expected 130 MMT.
Polish President Andrzej Duda pledged to protect Poland’s grain market from an influx of Ukrainian grain, emphasizing the need for control over such imports. “We cannot allow that Ukrainian grain is sold on the Polish market without any control,” Duda said in a Bloomberg Television interview in New York on Tuesday. Duda expressed concerns about the impact on Polish citizens and urged Ukraine to refrain from public attacks amid a dispute that has strained the close ties between the two countries in their united stance against Russia’s invasion of Ukraine.
The Fed is widely expected to hold interest rates unchanged following the two-day monetary policy meeting. If that’s the case, economists and traders will pay close attention to updated economic forecasts from Fed officials and Chair Jerome Powell’s post-meeting press conference for indications of future monetary policy moves.
Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) and former Sen. Saxby Chambliss (R-Ga.), who chaired the committee when he was in the Senate, spoke Tuesday at a Bipartisan Policy Center event on the farm bill. Stabenow expressed concerns about a potential government shutdown within the next two weeks, describing it as “self-inflicted.” She also indicated her aim for the Senate is to pass the farm bill in December, suggesting she doesn’t have much confidence in the House’s ability to pass a farm bill soon. While the House typically moves first on the farm bill, current expectations are that the less politically fractured Senate will take the lead this time.
USDA reported a daily sale of 120,000 MT of soybeans to unknown destinations for the 2023-24 marketing year this morning.
CORN: December corn futures showed impressive strength following Monday’s breakdown, retaking the double bottom low of $4.73 1/2. Futures continued to rally overnight, stalling at $4.78 1/2 resistance. This will be a key level throughout today’s session, as it marks the downtrend stemming from the Aug. 21 high. Bulls are seeking to hold $4.73 1/2 support, backed by $4.67 3/4.
SOYBEANS: November soybean futures saw slight corrective buying, but price action has largely stalled since Monday’s break lower. Bulls are seeking to hold Tuesday’s low of $13.08, backed by the psychological $13.00 level. Bears are seeking to hold $13.26 resistance, backed by $13.37 1/4.
WHEAT: December SRW futures saw corrective buying overnight but stalled at 10-day moving average resistance, currently at $5.94 1/2. Bulls are seeking a daily close above this level before tackling additional resistance at $6.00 then $6.05. Bears are seeking to take out $5.84 support, backed by $5.80, then the contract low of $5.70.
CATTLE: Choppy/higher.
HOGS: Choppy/higher.
CATTLE: Live cattle futures are expected to open mostly higher after consolidating the last two sessions, though Tuesday’s reversal from contract highs cast a concerning omen over today’s session. Bears want to see followthrough selling today to indicate an interim top may be in place, though the path of least resistance remains higher. While cash trade volume has been minimal thus far this week, prices have been well above last week’s cash average. Wholesale beef prices continue to slip, with Choice falling $3.20 to $302.12 and Select dropping $1.63 to $281.78 on Tuesday.
HOGS: Lean hog futures are expected to open mostly higher, bolstered by cutout strength. Pork cutout values held up well after Monday’s surge, with Tuesday’s quote rising an additional 17 cents to $101.13. Today’s cash index quote fell 23 cents to $86.58 (as of Sept. 18). While this is not the rally bulls expected since the near-term bottom on Sept. 5, the consolidation above $86.00 has given futures traders confidence, evidenced by the narrowing of the spread between October futures and the index, which is down to $1.73.
