GRAIN CALLS
Corn: 2 to 4 cents lower.
Soybeans: 3 to 5 cents higher.
Wheat: SRW 1 cent lower to 1 cent higher; HRW 2 to 4 cents lower; HRS steady to 2 cents lower.
GENERAL COMMENTS: Corn favored the downside overnight, soybeans reversed early losses and went into the break on session highs and wheat favored the downside though is well off session lows. Markets favored a risk-off tone overnight, as the U.S. dollar index is over 450 points higher and front-month crude oil futures are trading lower, on two month lows. The dollar index posting gains despite a downtick in interest rates, as the 10-year treasury yield is currently fetching 4.6%, is a break from the recent norm and a testament to the strength of the dollar.
Weather improved over the past week across Brazil but remains irregular with too-dry conditions in central and northeastern areas and too much rainfall in southern locations. While some fields will need to be replanted, crop consultant Dr. Michael Cordonnier kept his Brazilian soybean crop estimate at 160 MMT with a neutral to lower bias. He also kept his Brazilian corn crop estimate at 123 MMT with a lower bias, noting “worrisome signs on the horizon for safrinha corn.” Those include soybean planting delays and the need to replant some soybeans, which could push safrinha corn plantings past the ideal window. Cordonnnier left his Argentine crop estimates at 50 MMT for soybeans and 52 MMT for corn.
USDA rated 50% of the U.S. winter wheat crop as “good” to “excellent,” up three percentage points from the previous week. Traders expected conditions to be unchanged. The portion of crop rated “poor” to “very poor” declined one point to 17%. When USDA’s weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500-point scale, with 500 being perfect), the HRW crop improved 2.3 points to 321.0, while the SRW crop rose 1.6 points to 371.5. Both crops are rated well above year-ago levels at this time, with HRW up 55.0 points and SRW up 21.0 points.
China imported 5.16 MMT of soybeans in October, down 27.8% from September and lower than the 6.5 MMT to 7 MMT traders expected as some cargoes were delayed. However, that was up 24.6% from last year. Through the first 10 months of this year, China imported 82.42 MMT of soybeans, up 14.6% from the same period last year.
This morning, USDA reported daily sales of 110,000 MT of soybeans to delivery to China during the 2023-24 marketing year.
CORN: December corn futures faced renewed selling pressure overnight as prices fell below initial support at $4.74. This will stand as an important pivot today, continued weakness will target support at $4.70, quickly backed by last week’s low at $4.68. Bulls are targeting resistance at the 10-day moving average, which has capped gains since Oct. 23, currently at $4.78. Additional resistance stands at $4.81 1/4.
SOYBEANS: January soybean futures saw some corrective selling overnight, though have since changed course and went into the break on session highs. Bears are targeting a break below initial support at $13.64 1/4, backed by the psychological $13.50 mark. Futures are nearly 30 cents above the 10-day moving average, which could incite some corrective selling. Bulls are targeting resistance at yesterday’s move high at $13.69 3/4, backed by $13.75.
WHEAT: December SRW futures saw corrective selling overnight following four straight sessions of gains. Bulls reversed overnight losses Monday in an impressive show of strength, despite the lowest wheat inspections ever reported. Bulls are seeking to hold initial support at $5.66 1/2, which is backed by $5.60 1/2. Bears are seeking to hold resistance at $5.77 3/4, backed by $5.82 1/4.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Higher.
CATTLE: Live cattle futures are expected to open with a mostly weaker tone following Monday’s selloff. December futures quickly fell to the uptrend line drawn off the October lows. If that trendline holds, it could limit selling pressure. Last week’s average cash price firmed 87 cents from the prior week to $184.89 and cash sources expect that strength to continue this week, barring extensive weakness in futures. Wholesale beef prices continue to slip as Choice fell 62 cents yesterday to $301.72 and Select dropped $1.65 to $270.36. Movement was light at 87 loads and Choice is nearing the $300 mark, which has acted as significant support in the past, both of which point to potential strength mid-week. The Choice/Select spread widened to $31.36 from already-wide levels historically, showcasing the continued tightness of quality market-ready cattle supplies, which could lend support to the cash cattle market this week.
HOGS: Lean hog futures are expected to open mostly higher on continued technical buying, with firm backing from strength in the wholesale market. Wholesale pork prices jumped $4.33 to $91.61 Monday, the highest level since Oct. 12. As expected, this fell from yesterday’s midsession jump, though gains remained firm, led by a $14.86 jump in bellies. Loads were the lowest since Sept. 8, which points to the potential of a pullback once volume increases as the week goes on. The CME lean hog index dropped another 22 cents to $76.23 (as of Nov. 3), narrowing the spread between the index and December futures to $3.83. There are 27 trading days until the December contract’s expiration on Dec. 14, at which point they will cash settle against the index quote for that date on Dec. 18. That calculates to a drop of about 14 cents per day in the index, well below the recent norm, pointing to traders’ expectations of an early seasonal bottom compared to recent years.