GRAIN CALLS
Corn: 3 to 5 cents lower.
Soybeans: 21 to 23 cents lower.
Wheat: Steady to 2 cents lower.
GENERAL COMMENTS: Soybeans led weakness overnight amid a volatile Brazilian real. Losses in beans weighed on corn, while wheat saw relative strength. Front-month crude oil futures are down on corrective selling overnight, while the U.S. dollar index is up around 85 points.
Lula eked out a surprise victory over challenger Flavio Bolsonaro in Sunday’s runoff presidential election to win an unprecedented fourth term in Brazil. Lula had been largely written off by financial market participants after coming in second behind Bolsonaro in first-round voting on Oct. 5, sparking a nearly 5% rally in the Brazilian real and lifting domestic financial markets. Tightening polls indicated momentum had shifted toward the incumbent by the end of last week but financial and betting markets continued to price in a Bolsonaro victory. A firmer real means less revenue for Brazilian farmers, slowing sales. A weaker real has the opposite effect. A strong correlation between soybeans and moves in the Brazil real exchange rate with the U.S. dollar set the tone overnight. Brazilian real futures plunged over 10% ahead of the open of cash FX trading in the Western Hemisphere, with fund managers dumping soybeans alongside. The election outcome, however, wasn’t without controversy. Bolsonaro is calling for the election to be annulled after a Supreme Court judge extended polling hours at the last minute.
In a late Friday afternoon announcement, USDA’s National Agricultural Statistics Service said it “found a processing error that affected September corn plant populations, ear counts, yields, and production for Kansas and Nebraska.” The agency said the error also affected the September 10-state averages for plant populations and ear counts, along with U.S. corn yield and production forecasts. USDA, however, didn’t elaborate on what the error was. And while it corrected the error in the September data, USDA said its October corn yield and production estimates will stand. “The October forecasts published on October 9 were reviewed, validated, and have not changed,” USDA said.
Read:USDA Admits Corn Data Error in September Report, But Controversial 181.2-Bu. Yield Forecast Stands
Federal Reserve policy makers are largely expected to leave interest rates unchanged when they conclude a two-day policy meeting on Wednesday, though stubborn inflationary pressures mean additional hikes are widely expected in coming months. Fed policy makers have signaled that they’re not necessarily in a rush to deliver further tightening but have also signaled that inflation isn’t moving back toward the central bank’s 2% target quickly enough. “Were it not for comments by a few Fed officials in the inter-meeting period that they did not think a rapid pace of rate hikes would be necessary, we suspect that the market would be pricing in a much higher probability of a hike,” said Thomas Simons, chief U.S. economist at Jefferies, in a note. “We doubt the FOMC is going to surprise the market with a hike, but a 9-3 split decision with dissents in favor of a hike is likely to be viewed as a ‘hawkish pause.’”
CORN: December corn slid to fresh lows overnight. Support stands at the psychological $4.50 mark. Bulls are eyeing resistance at $4.53 1/2, the Oct. 21 low, then $4.60 on a bounce.
SOYBEANS: January soybeans plunged below key support overnight. $12.55 1/2 remains a key pivot today. Prices fell below that mark on Brazilian real driven pressure. Additional support comes in at $12.40. Additional resistance at $12.60 comes in on a bounce.
WHEAT: December SRW wheat are consolidating near recent lows. Support comes in at $6.20 then $6.11 1/2 on persistent selling. Bulls are eyeing resistance at $6.25 then $6.30 on strength.
LIVESTOCK CALLS
CATTLE: Higher.
HOGS: Choppy/higher.
CATTLE: Live and feeder cattle futures are expected to open higher following Friday’s bullish Cattle on Feed report. Placements dropped 12% from year-ago, well below expectations, pulling cattle on feed down 1% when expectations showed an increase. Futures have been consolidating the past three sessions, awaiting the report and data from the cash market. Cash trade remained slow into Friday but the friendly report likely bolstered cash strength.
HOGS: Lean hog futures are expected to open with a mostly firmer tone on corrective buying. December lean hog futures are riding the 10-day moving average lower, futures saw some strength on Friday and another test of that mark seems likely. The CME lean hog index is another 99 cents lower to $71.16 as of Oct. 22, extending the seasonal decline. Pork cutout fell $1.14 to $74.09 Friday amid losses in all cuts but picnics.