Ahead of the Open | October 26, 2023

Corn, soybeans and wheat are expected to open mildly firmer this morning.

Pro Farmer's Ahead of the Open
Pro Farmer’s Ahead of the Open
(Pro Farmer)

GRAIN CALLS

Corn: Steady to 2 cents higher.

Soybeans: 3 to 6 cents higher.

Wheat: 4 to 8 cents higher.

GENERAL COMMENTS: Corn, soybeans and wheat firmed overnight, with corn and soybeans finding a late push to the upside after strong weekly export sales. Wheat was supported by news Ukraine suspended use of its humanitarian Black Sea grain corridor. Buyer interest during early daytime trade is likely to be limited by outside markets, with crude oil more than $2.00 lower and the U.S. dollar index around 150 points higher.

Ukraine has suspended use of its new Black Sea grain corridor due to what it sees as a threat from Russian warplanes, Kyiv-based Barva Invest consultancy said. The consultancy said a de facto suspension had already been in place for two days at the behest of the military, which cited a threat from increased Russian military aviation activity in the area.

World Weather Inc. says the European forecast model has increased center-west Brazil rainfall again late in this coming seven-day period, especially during the second weekend of the two-week forecast. However, the forecaster believes the increase was overdone. The GFS (American) model run continues to downplay rainfall in center-west Brazil over the next week to 10 days. World Weather notes until the Amazon River Basin clouds up better and daily thunderstorms occur it is likely the GFS is handling the situation better than the European model. Southern Brazil remains too wet, with flooding expected through the middle of next week.

The overnight frost in southeast Australia should have a low impact on crops, according to World Weather. The forecaster noted, “Most of the wheat and barley should not have been seriously impacted since most temperatures stayed above freezing.”

USDA reported daily soybean sales of 110,000 MT to China for 2023-24.

Export sales for the week ended Oct. 19:

Corn: Net sales of 1.351 MMT for 2023-24, up 53% from the previous week and 22% above the four-week average. Mexico was the lead buyer at 762,400 MT. Sales topped expectations of 600,000 MT to 1.2 MMT.

Soybeans: Net sales of 1.378 MMT for 2023-24, a marketing-year high and 43% above the four-week average. China bought 1.167 MMT, including 776,000 MT switched from unknown destinations and decreases of 142,200 MT. Traders expected sales between 750,000 MT and 1.5 MMT.

Wheat: Net sales of 363,700 MT for 2023-24, down 43% from the previous week and 31% from the four-week average. China bought 65,000 MT of U.S. wheat on the week. Traders expected sales of 300,000 to 600,000 MT.

CORN: December corn futures paused overnight after four days of price losses. If the contract rebounds from the current level there would be an inverted head-and-shoulders formation on the daily chart. A drop below $4.75 would suggest a test of the September low.

SOYBEANS: November soybean futures firmed late in the overnight session after quiet, two-sided trade earlier. Clear near-term boundaries extend from Tuesday’s low at $12.80 1/2 to last week’s high at $13.18 1/2.

WHEAT: December SRW futures pushed above the 20-day moving average during overnight trade. The 5-, 10- and 40-day are clustered in a range from $5.79 1/4 to $5.81 1/2 and will provide near-term resistance. The overnight low at $5.63 1/4 is initial support.

LIVESTOCK CALLS

CATTLE: Choppy/higher.

HOGS: Choppy/higher.

CATTLE: Live cattle futures are expected to open with a mostly firmer tone as bulls try to recover from Monday’s washout. While futures have firmed some the past two days, the gains haven’t come easy, suggesting a new catalyst is needed to fuel fresh buying. This week’s cash cattle trade has been limited at mostly $1.00 to $2.00 lower prices in far northern market. Choice boxed beef prices are showing signs of gaining some footing, firming another $1.52 on Wednesday, though Select dropped $2.34. USDA’s Cold Storage Report Wednesday afternoon showed beef stocks at the end of September totaled 420.2 million lbs., up 24.8 million lbs. (6.3%) from August, which was greater than the five-year average increase of 11.1 million lbs. during the month. But beef inventories dropped 105.9 million lbs. (20.1%) from year-ago and were 60.7 million lbs. (12.6%) below the five-year average. USDA reported beef export sales of 17,400 MT for 2023, up 72% from the four-week average.

HOGS: Lean hog futures are expected to open mostly firmer on followthrough from a strong close Wednesday that included a bullish reversal in the December contract. But buyer interest is likely to be limited by continued seasonal pressure on the cash market. The CME lean hog index is down another 26 cents to $78.41 (as of Oct. 24), extending the persistent seasonal slide. December lean hog futures firmed $1.125 on Wednesday, narrowing the front-month contract’s discount to $10.91, which is slightly less than the five-year average decline from now until contract expiration in mid-December. USDA’s Cold Storage Report showed pork stocks at 462.8 million lbs., down 6.5 million lbs. (1.4%) from August, whereas the average over the past five years was a 3.0-million-lb. increase during September. Pork stocks fell 74.3 million lbs. (13.8%) from last year and were 69.4 million lbs. (13.0%) lower than the five-year average. USDA reported pork export sales of 28,200 MT for 2023, down 8% from the previous week and the four-week average.