GRAIN CALLS
Corn: 1 to 3 cents higher.
Soybeans: 6 to 10 cents higher.
Wheat: SRW 2 to 4 cents higher; HRW 1 cent lower to 1 cent higher; HRS 2 to 4 cents higher.
GENERAL COMMENTS: Corn, soybeans, SRW and HRS wheat futures regained a portion of Tuesday’s losses overnight, while HRW contracts failed to sustain corrective gains from earlier in the session. Forecasts calling for extreme heat and dryness, along with increased Black Sea supply uncertainties are supportive, though Chinese economic concerns are a wet blanket for markets. Outside markets are quiet with crude oil and the U.S. dollar index trading near unchanged this morning.
Forecasts continue to call for extreme heat and a period of dryness over the central United States, starting this weekend, with some models suggesting little to no rain for two weeks. The hottest temps are expected to be centered over the Plains and western Corn Belt, though the eastern Corn Belt and Mid-South will also be hotter than normal. Temps are expected to return to more seasonal levels by late next week. The heat and dryness will stress crops and push maturity.
Russian drone strikes damaged grain silos and warehouses at the Ukrainian river port of Reni on the Danube. While the attacks damaged grain storage, an industry source told Reuters the port continued to operate. There were also reports of Russian drone attacks on the Ukrainian port of Izmail on the Danube. Meanwhile, a Hong Kong-flagged ship trapped at the Odesa port since the Russian invasion, left via the “humanitarian corridor” Ukraine’s Navy announced last week.
Ukraine shipped 8.1 MMT of grain through the Romanian Black Sea port of Constanta in the first seven months of the year, the port authority told Reuters, with the pace slowing in July when Russia began attacking infrastructure at its inland ports.
China’s economic woes continue to mount, with concerns the collapse of its real estate bubble will cause financial contagion in the country. Firms are cutting China’s economic growth forecasts and Beijing’s official target of around 5% appears optimistic. The yield differential between the China and U.S. benchmark 10-year government bonds widened to the most since February 2007 today, as investors speculated China’s central bank would ease monetary policy further after a surprise rate cut on Tuesday, even if it puts the yuan under pressure.
CORN: December corn futures posted modest corrective gains overnight after the technical breakdown below $4.81 on Tuesday. Next support is in the $4.73 to $4.62 range. Resistance is heavily layered from $4.81 to $5.07 1/2.
SOYBEANS: November soybean futures continue to chop within the broad range from $12.82 1/4 to $13.54 and are currently near the middle. The eventual breakout from that range will likely trigger the next trending move.
WHEAT: December SRW futures rebounded a little overnight after dropping to the lowest level since the end of May. Near-term support extends from the overnight spike low at $6.17 1/4 to the May low at $6.08 1/4. Resistance is heavily layered from $6.41 1/2 to $6.87.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open with a mostly firmer tone after a poor close on Tuesday. But seller interest should be somewhat limited by the big discount futures hold to the cash market. Traders have shown no willingness to actively narrow the discount even amid the outlook for supplies to tighten even further versus year-ago into 2024. Wholesale beef prices posted strong gains for a second straight day on Tuesday, with Choice up $1.76 and Select $2.58 higher. That will help packer margins, though they remain in the red. Packers will likely continue to control the tight supply situation by slowing slaughter runs until their margins turn positive. Traders are starting to prepare for Friday afternoon’s Cattle on Feed Report, which is expected to show feedlot inventories below year-earlier levels for an 11th straight month.
HOGS: Lean hog futures are expected to open under pressure amid followthrough selling. While fall- and winter-month contracts hold bigger-than-normal seasonal discounts to the falling cash index, the path of least resistance remains down. At this point, the upside is limited to modest corrective buying and there’s more downside risk. The CME lean hog index is down another 64 cents, extending the seasonal price pullback. The index has fallen more than $4.00 from its late-July peak, but October hogs have dropped more than $8.50 since that time. The pork cutout value dropped 45 cents on Tuesday, though movement improved to nearly 325 loads, suggesting retailer demand may be starting to strengthen.