Corn: Corn futures settled 3 1/2 to 4 3/4 cents higher today. For the week, December corn futures firmed 5 1/2 cents. This week’s price gains aren’t overly impressive on the surface, but the fact the contract dropped to new lows before recovery back above the July and August lows suggests a seasonal low may be in place. Monday’s price action could be very telling after three days of corrective gains to close out the week. Additional gains on Monday would suggest an extended correction could be underway. If the buying dries up on Monday, it would suggest the move up was little more than a correction to the bear market. USDA’s Quarterly Grain Stocks Report next Friday will set final 2017-18 ending stocks and give indicate summer usage. We anticipate a slight uptick in stocks from levels USDA estimate in the Sept. 12 Supply & Demand Report. Harvest is off to an aggressive start. Given heavy rains across areas of the upper Corn Belt this past week, stalk quality is an issue. However, it’s unlikely this will become a market factor. The market will have to fight seasonal pressure as harvest progresses and corn piles build. Attention should turn to demand earlier than normal this year as the big crop is already well known. Strong demand for U.S. corn should help quickly reduce corn stockpiles, which should help prices rebound once a seasonal low is confirmed. The demand side of the market is reason we are willing to wait on a strong price recovery before advancing sales.
Soybeans: Soybean futures finished the day with just fractional losses and near their daily highs. For the week, November soybeans gained 19 1/4 cents. Soybean meal lost more than 1% on Friday, paring its weekly gain to just 20 cents. There were bullish elements at work late this week that drove prices higher and could at least limit the downside early next week. Weekly soybean export sales for 2018-19 nearly hit nearly 1 MMT for the week ended Sept. 13. We also expect strong export sales for the week ended Sept. 20. Reports China is sourcing U.S. soybeans through Argentina, Brazil and Canada in part triggered the corrective rebound in beans late this week and could be supportive for prices next week, too. Heavy rains fell in large portions of the western Corn Belt this week. While harvest activity was slowed, a greater concern is lodging and potential crop losses from the excessive late-season precip. Forecasts call for more heavy rains in the eastern and southern Corn Belt next week. On the bearish side of the ledger for the coming weeks, the respected Oil World publication is just out with revised forecasts for 2018/19 that lowered China soybean imports to 88.5 MMT and reduced the U.S. export forecast to 1.984 billion bushels.
Wheat: Winter wheat futures settled high-range but in negative territory, with most contracts posting losses between ¼ and 2 ¼ cents. Spring wheat futures settled midrange and roughly 3 to 6 cents lower. For the week, all three varieties posted gains, with the December SRW contract climbing just over a dime. Recent rains have helped winter wheat planting to get off to a quick start on the Plains, leading to some talk planted acres could climb. Traders will look to USDA’s Crop Progress update for additional guidance on that front. Also of note, USDA will issue its final wheat crop estimate next Friday, but just minor tweaks are anticipated. U.S. export prices are competitive with those of other global suppliers, which should soon translate to improved demand for the U.S. grain. Signs that tightening global supplies are also encouraging aggressive forward purchases by users is another supportive factor.
Cotton: Cotton prices rose on Friday, paring a weekly loss. December futures fell 270 points this week, to close at 79.13 cents. That’s the lowest weekly close for the contract in five months. Prices broke out to the downside this week and will likely remain under pressure. Damage to the North Carolina crop from Hurricane Florence may reach 200,000 bales, according to industry contacts. That was a little less than feared before the storm and should not have much impact on overall supplies. That is especially true if Texas growers harvest more acres than expected because of the payments under the Trump tariff aid program. More cotton growers are deciding to harvest a much- beaten-down crop rather than give up on it and collect crop insurance, according to cotton farmers in Texas this week. Late-season rains have also helped to boost some yields across parts of the Delta and Texas the past month. USDA forecast U.S. cotton production at 19.68 million bales earlier this month, up 450,000 bales from its August forecast, but still down 1.24 million from a year ago. U.S. inventories are forecast to rise to 4.7 million bales this season from 4.3 million last year, USDA said. Supplies are adequate, especially with the recent slowdown in export sales. The market continues to be nervous about U.S. business with China going forward amid the ongoing trade tariff war.
Hogs: December lean hog futures closed down $1.00, while February hogs were down 85 cents today. For the week, December hogs still gained $1.775 and closed at the highest weekly settlement since June 15. Despite some normal profit taking in the futures market today, it was a good week for the hog market bulls, which is likely to prompt some follow-through buying early next week. The Lean Hog Index on Monday is projected at $59.09. Traders are working to narrow the premium futures hold to the cash index. Traders are awaiting this Monday’s monthly USDA cold storage report, which is expected to show rising stocks in August, possibly a record high number for the month. That could limit buying interest in hog futures early next week, if the report meets trader expectations. The hog backlog in North Carolina last week due to downtime from Hurricane Florence was around 320,000 head. A hog industry source says if those hogs are kept in state it could take between five to six weeks of six-day operations just to get back to normal.
Cattle: Live cattle closed higher Friday and mostly higher this week. Feeder cattle pared weekly declines on Friday. December live cattle rose 40 cents this week to $118.40, while November feeder cattle futures fell 62.5 cents to $157.80. Beef prices have been under pressure for the last four weeks after topping in late August. The Choice beef cutout on Friday at midday was back down near the late-July lows. Sales did improve this week at the wholesale level. Slaughter this week was estimated up 3% from a year ago. Weekly carcass weight data showed steer weights rose 8 lbs from a week earlier, with total slaughter cattle average market weights up 6 lbs, USDA said in a report Thursday. Traders will be anxious to see how much beef inventories rose in August in the latest USDA cold storage report on Monday. Rising slaughter and weights mean more exports will be needed to keep beef from accumulating in the nation’s freezers the next 30 days. Cattle on feed rose 5.9% to 11.125 million head on Sept. 1 from a year earlier. That topped traders’ estimates looking for a 4.2% to 6% increase. Placements jumped 7.4% to 2.07 million head last month from a year earlier, also topping trade estimates looking for 1.1% to 7% increase. Rising beef supplies implied by the USDA report are likely to keep a lid on rallies in the cattle futures, especially the deferred contracts.