GRAIN CALLS
Corn: 1 cent lower to 1 cent higher.
Soybeans: 3 to 5 cents lower.
Wheat: Winter wheat 5 to 8 cents lower; HRS 3 to 5 cents lower.
GENERAL COMMENTS: Corn, soybeans and wheat each favored the downside overnight, with wheat going into the break on session lows. Price action in grains is likely to be largely driven by positioning ahead of Thursday’s USDA WASDE and Crop Production reports. The situation in the Middle East continues to hold the markets attention, evidenced by the “flight to safety” in U.S. treasury bonds, bringing the 10-year treasury yield to 4.57%, down from last week’s peak of 4.81%. This has caused a similar downturn in the U.S. dollar index, which has seemingly broken the uptrend stemming from the July low. Front-month crude oil futures have struggled to post gains the last two days and are facing moderate losses currently, as the U.S. dollar index is around 100 points lower to start the day.
In a volatile turn of events, an anti-tank missile fired from Lebanon struck an Israeli military post near the border, intensifying the already heightened tensions in the region. Adding to the complexity of the situation, Hezbollah, an Iran-funded group operating from Lebanon, has expressed solidarity with Hamas and launched several rockets at Israel. The specter of a ground invasion of Gaza looms as Israeli Prime Minister Benjamin Netanyahu vowed that their actions in the days to come would have far-reaching repercussions. However, such an invasion would be fraught with challenges, given Gaza’s densely populated areas, intricate underground tunnel network and the inherent risks it poses to potential hostages. U.S. Secretary of State Antony J. Blinken plans to arrive in Israel on Thursday, carrying “a message of solidarity and support” from Washington.
The House Republican Conference will hold its internal election this morning at 9 a.m. CT. A cloud of uncertainty hangs over the process, leaving it unclear how long it will take to agree on a new leader. The two declared candidates vying to replace Speaker Kevin McCarthy, namely No. 2 House Republican Steve Scalise of Louisiana and hardline Judiciary Chair Jim Jordan of Ohio, addressed fellow Republican lawmakers during a closed-door meeting Tuesday evening. The ousting of McCarthy has cast a shadow of doubt over critical matters, including funding for the U.S. government, as a temporary bill is set to expire after Nov. 17, as well as assistance to Ukraine and Israel. The ongoing leadership struggles have also raised the possibility of new candidates emerging in the event that none of the current contenders can secure enough support to assume the role of speaker.
France’s ag ministry raised its forecast for 2023-24 wheat exports outside the EU by 300,000 MT to 9.8 MMT, though that would still be 3.5% below last year. The ministry cut its forecast for wheat exports within the bloc by 210,000 MT to 7.54 MMT, which would be up 14.8% from 2022-23.
A senior Ukrainian ag ministry official said he still expects the country to plant 4.4 million hectares to winter wheat. As of Oct. 9, 3.7 million hectares had been planted to the crop. Last week, Ukraine’s ag minister warned not all intended winter wheat acres would likely be seeded.
This morning, USDA announced daily sales of 121,000 metric tons of soybeans for delivery to China during the 2023-24 marketing year as well as sales of 213,000 MT of soybeans for delivery to unknown destinations during the 2023-24 marketing year.
CORN: December corn futures are near the lower end of an uptrend on the daily bar chart. This will provide initial support at $4.81 1/4, a break below which has bears targeting $4.76 3/4, though a test of $4.74 1/2 support seems likely in that case. Bulls are targeting initial resistance at $4.85 1/2, backed by the 40-day moving average, currently at $4.88 3/4. Trade is likely to be largely driven by positioning ahead of Thursday’s reports.
SOYBEANS: November soybean futures fell overnight despite yesterday’s gain. The $12.75 area remains an important pivot with the majority of recent trading taking place around there. Bulls need a close above initial resistance of $12.77 to argue an interim low could be in place, while additional resistance lies at $12.81, then $12.93 1/4. Support stands at $12.56 3/4 and is quickly backed by Tuesday’s for-the-move low at $12.54 1/4. Other support is slim until the $12.40 area.
WHEAT: December SRW futures faced sharp losses Tuesday and continued lower overnight. The overarching downtrend remains fully intact with little signs of a bottom in place. Bulls are seeking to hold initial resistance of $5.51 3/4, backed by the contract low of $5.40. Bears are seeking to hold initial resistance of $5.66 3/4, backed by the 40-day moving average, currently at $5.76, which has stalled the last two rally attempts.
LIVESTOCK CALLS
CATTLE: Choppy/lower.
HOGS: Lower.
CATTLE: Live cattle futures are expected to open mostly lower, though continued consolidation and technical buying could limit selling pressure. Futures have formed a “bear flag” technical pattern, meaning violation of the recent lows would indicate a technical breakdown and could accelerate selling. While wholesale beef prices fell sharply Tuesday, with Choice falling $2.36 to $301.06 and Select dropping $1.35 to $276.15, movement soared to 217 loads, the most since Sept. 7, 2022. The demand seen for wholesale beef could also limit selling pressure if it continues today.
HOGS: Lean hog futures are expected to open mostly lower as seasonal pressure and technical selling are likely to continue. Prices remain in a steep downtrend on the daily bar chart and cash fundamentals continue to falter. Wholesale pork prices fell $1.99 Tuesday to $93.07, led lower by a $19.31 drop in bellies. While the CME lean hog index fell 20 cents to $82.26 today (as of Oct. 9), the internal components of the calculation showed potential signs of stabilizing. The index is a two-day weighted average, and the single day average for Monday at $82.31 topped Friday’s single-day figure at $82.22. The stabilizing cash market could limit selling pressure, especially in nearby contracts that hold discounts to the index.