GRAIN CALLS
Corn: 2 to 4 cents higher.
Soybeans: 10 to 12 cents higher.
Wheat: 6 to 8 cents higher.
GENERAL COMMENTS: Soybeans continue to lead strength on hopes of clarity regarding China on trade. Corn and wheat saw followthrough buying overnight as well. Corn, soybeans and wheat are each well above the 10-day moving average, which could spark some corrective selling, but the technical edge has quickly turned to favor the bulls. Outside markets are unfavorable this morning as front-month crude oil futures are modestly lower while the U.S. dollar index is around 20 points higher. Equity futures continue to show resilient strength and are trading near all-time highs.
In his weekly report, crop consultant Dr. Michael Cordonnier increased his Brazilian soy production estimate 2.0 MMT to 177.0 MMT with a neutral to higher bias. He notes the expected acreage has been working higher with increases as high as 5.9% in some regions, including Mato Grosso do Sul. The soybean crop has been sowed at an aggressive pace, with 36% of expected acres planted as of Oct. 23 according to AgRural, which could allow for additional acres. Cordonnier notes a weaker La Nina is forming in the pacific, which historically has led to lighter than normal precipitation in Brazil, a key to watch out for in the coming months. Cordonnier left his Brazilian corn production estimate unchanged at 140.0 MMT with a neutral bias, but notes first-crop corn is off to a good start.
The U.S. Senate Committee on the Judiciary is holding a hearing today entitled, “Pressure Cooker: Competition Issues in the Seed and Fertilizer Industries.” The hearing will focus on concerns that consolidation in the U.S. seed and fertilizer industries contributes to higher input costs for farmers who are already dealing with low ag commodity prices. Critics, including Iowa Senator Chuck Grassley, have long raised concerns that a handful of companies have a disproportionate amount of market power in the two industries. By 2017, just four companies controlled 80% of the U.S. corn seed market and 75% of the soybean seed market, a result of intellectual property expansion and industry mergers. The situation puts smaller U.S. farmers at a disadvantage, as they struggle to compete with larger agribusinesses on price and may not have access to the same credit or competitive offerings.
The Federal Reserve’s Open Market Committee meeting begins this morning and ends Wednesday afternoon with a statement and press conference from Fed Chairman Powell. The FOMC is widely expected to deliver a second straight 0.25% interest-rate cut to boost the U.S. job market. Fed policymakers are divided, however, with some worrying that cutting rates will go too far and others supporting even further reductions, all amid the lack of U.S. government economic data releases during the federal government shutdown.
CORN: December corn continues to encounter stiff resistance at $4.32 1/2, the 200-day moving average. Above that mark, bulls are looking to challenge resistance at $4.37. Tentative support stands at $4.30 with backing from yesterday’s low at $4.26.
SOYBEANS: January soybeans continue to lead strength. Resistance comes in at the psychological $11.00 mark on persistent strength, which sees little backing until $11.10 3/4. Some profit-taking is possible given recent explosive gains. Support comes in at the June 20 high of $10.87 then $10.77 on corrective selling.
WHEAT: December SRW wheat continued higher overnight. Bulls are seeking to close prices above the 100-day moving average at $5.35 1/4, resistance stands at $5.40 above that mark. Support comes in at yesterday’s close of $5.26 with backing from the key 40-day moving average at $5.16 1/4.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Choppy/higher.
CATTLE: Cattle futures are expected to open with a mostly weaker tone in a continuation of recent selling pressure, though continued strength in cash fundamentals could limit losses after the open. Feeders closed limit lower again on Monday, leading to expanded limits again today. While options indicated feeders were synthetically another $9.00 lower Monday, continued persistent strength in cash fundamentals could limit selling pressure, especially in the ongoing high volatility environment. Cash cattle trade sunk late last week and showed a modest decline, though prices are well above futures. Wholesale beef has shown resilient strength over the past week despite the ongoing decline in cash and futures. Choice cutout rose another $2.12 to $377.88 Monday while select surged $3.69 to $361.66.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on corrective buying, though a continuation of recent selling pressure could limit gains after the open. Futures are trading near new lows but technical support persists near the 200-day moving average at $81.10 in December futures. The CME lean hog index is down another 68 cents to $92.27 as of Oct. 24, extending the seasonal slide. Pork cutout fell $1.66 to $101.08 Monday, led by losses in butts and hams.