Ahead of the Open | November 2, 2023
GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 5 to 7 cents higher.
Wheat: Winter wheat 3 to 5 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Soybeans showed relative strength overnight, though went into the break well off session highs. Corn and wheat both showed corrective gains early but have since fallen near session lows. Outside markets are supportive following yesterday’s Federal Reserve interest rate decision that left rates unchanged and led traders to believe the tightening cycle has come to an end. Bond yields are sharply lower, as the 10-year treasury is currently fetching 4.64%, which sent the U.S. dollar index over 1000 points lower on the session. Front-month crude oil futures are trading near unchanged, though the S&P 500 is nearly 40 points higher and on two-week highs.
Commodity brokerage StoneX raised its estimate of U.S. 2023 corn production to 15.302 billion bu. on a yield of 175.7 bu. per acre. Those figures are up from the firm’s October forecasts of 15.282 billion bu. and 175.5 bu. per acre. For soybeans, StoneX lowered its production forecast to 4.162 billion bu. on a yield of 50.3 bu. per acre, down from 4.175 billion bu. and 50.4 bu. per acre last month.
China’s soybean imports are likely to stay high through the fourth quarter, taking 2023 purchases to a record 105 MMT, but lackluster demand from hog farms is seen reducing purchases in early 2024, according to Reuters. Brazilian soybean supplies shipped to China are expected to be stronger than normal in the fourth quarter, reducing demand for U.S. supplies. China will import around 26 MMT of soybeans during the last three months of the year, with around 45% of the cargoes arriving from Brazil, based on the forecasts of four trading sources.
World Weather Inc reported forecast rain in Argentina that will bolster soil moisture, improving summer crop planting conditions. Mato Grasso to northeastern Brazil are expected to receive rain Saturday through Wednesday as well, with the region trending drier again after that. The moisture will offer temporary improvements to crop development.
Export sales for the week ended Oct. 26:
Corn: Net sales of 748,100 MT for 2023-24, down 45% from the previous week and 40% from the four-week average. Increases came primarily for Mexico and unknown destinations. Traders expected sales between 600,000 MT to 1.2 MMT.
Soybeans: Net sales of 1.01 MMT for 2023-24, down 27% from the previous week and 13% from the four-week average. China bought 976,800 MT, including 587,000 MT switched from unknown destinations. Traders expected sales between 900,000 MT and 1.5 MMT.
Wheat: Net sales of 275,600 MT for 2023-24, down 24% from the previous week and 43% from the four-week average. Increases came primarily for Thailand and Taiwan. Sales were below expectations of 300,000 to 600,000 MT.
CORN: December corn futures saw early corrective gains overnight but went into the break on session lows. Prices slipped below $4.74 support, which will remain an important level into today’s session. Below this, bears are targeting the Sept. 19 low of $4.67 3/4, below which remains little support until $4.50. Bulls are seeking to capture resistance at $4.78, backed by the 10-day moving average at $4.80 1/2.
SOYBEANS: November soybean futures surged overnight though went into the break well off session highs. Bulls struggled to overcome initial resistance at the $13.00 mark, above this bulls are eyeing resistance at $13.11 1/4. Bears are aiming to break prices below $12.92 1/4 support before tackling trendline support at $12.89.
WHEAT: December SRW futures gave up early corrective gains overnight and turned lower. Bears are eyeing downward trendline support at $5.55, quickly backed by Tuesday’s low of $5.54 1/2, then $5.47 1/4. Bulls are targeting initial resistance at the 10-day moving average, currently at $5.68 1/4, then $5.72.
CATTLE: Choppy/lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to favor more of a weaker tone as December futures continue to struggle filling last week’s downside gap. Technical resistance is likely to continue to weigh on the market. Bears are further bolstered by falling wholesale beef prices Wednesday, as packers cut prices in order to move a strong 136 loads. Choice cutout fell $3.00 to $302.18 while Select fell 95 cents to $278.55. Cash cattle trade is likely to ramp up in the final days of the week, which could limit the downside in futures. Very little trading has taken place thus far, but there was a small lot that took place at $184.00, leaving the door open for higher cash cattle trade to end the week. USDA reported beef export sales of 17,100 MT for 2023, down 2% from the previous week but up 71% from the four-week average.
HOGS: Lean hog futures are expected to open mostly lower in continuation of yesterday afternoon’s selloff. The CME lean hog index is down another 19 cents to $76.94 today (as of Oct. 31) as traders widened the spread between December futures and the index for the first time in five days. The second day in the calculation for the index (it’s a two-day average) rose from the prior day and any sustained strength today would point to a rise in the index, which could limit selling pressure midsession. Wholesale pork prices rose two cents to $86.50, with a jump in picnics keeping the cutout higher. USDA reported pork export sales of 31,100 MT for 2023, up 10% from the previous week and just above the four-week average.
