Corn: Corn futures closed down 10 1/4 to 11 1/2 cents today, hit nearly three-week lows and saw technically bearish weekly low closes. For the week, December corn futures lost 12 1/2 cents. The beating corn futures took today, following the bearish USDA report, has abruptly halted the near-term price uptrend and opens the door for more downside price pressure early next week. They key question on traders' minds is how soon the bearish USDA data will be digested. Another bearish element for the corn and other grain markets is the sharp appreciation of the U.S. dollar this week. Furthermore, uncertainty on the foreign exchange market front, following today's gyrations mainly tied to the plummeting Turkish lira, is likely to at least somewhat squelch buying interest in the grains and many other commodity markets -- until that situation settles down. While U.S. corn production was today raised by over 350 million bu. from last month’s USDA projection, it was also 18 million bu. smaller than a year ago. Stronger export and feed demand for corn are likely to soon have traders once again focusing on a world supply-and-demand balance for corn that cannot be called bearish. USDA today forecast global production will rise, but demand will rise faster. That will cut world corn inventories as a percent of use to the tightest in 45 years
Soybeans: Soybean futures ended an bearish trading session down around 43 cents. Prices hit 2.5-week lows and closed at technically bearish weekly low closes. For the week, November soybean lost 42 1/4 cents. Soybeans fell sharply lower today, following the surprisingly bearish USDA report. The fledgling near-term price uptrends in futures contracts have been killed and the door is open for more downside price pressure next week. How soon the bearish USDA data will be digested by the soybean market will the key question early next week. Another bearish factor for the soybean market is the sharp appreciation of the U.S. dollar seen on the foreign exchange market late this week. Uncertainty on the foreign exchange market front, mainly tied to the plummeting Turkish lira, is likely to at least somewhat limit buying interest in soybeans and many other commodity markets early next week, or longer. The U.S.-China trade dispute that has China targeting U.S. soybeans for import tariffs remains a major bearish element for the soybean market. China recently removed U.S. crude oil from Chinese tariffs, signaling America has become too big to ignore in the oil market. Could the same happen with soybeans? We don’t have confirmation on any change regarding China’s current tariffs on U.S. soybeans, but there is industry and trade policy chatter about such a potential move. Even without a change in the tariff policy, China will need to import U.S. soybeans.
Wheat: Winter wheat prices finished today’s session down 17 1/2 to 19 3/4 cents and also ended the week at technically bearish weekly low closes. December SRW futures ended the week down 13 1/4 cents. December HRW futures finished the week down 10 1/4 cents. Today's USDA report did not contain quite the bullish world supply situation that many were hoping to see. And the sharp losses in corn and soybean futures added to the selling pressure in the wheat futures markets today. Still, it's likely the wheat market by early next week will again focus on its own supply and demand fundamentals, which are still overall bullish from a world perspective. Combined wheat production in the European Union, Russia, and Ukraine is forecast down 12% from last year to the lowest level in five years. U.S. wheat exports are 28% behind last year and unless better sales numbers emerge in the coming weeks, the U.S. winter wheat markets may have put in near-term tops this month.
Cotton: Cotton futures finished 140 to 203 points lower after a negative reaction to USDA’s report data. For the week, December cotton futures dropped 289 points. Traders focused on USDA’s sharp increases to its U.S. carryover forecasts. With today’s poor closes, followthrough selling is likely Monday. But if followthrough seller interest is limited, we wouldn’t be surprised to see the market rebound since global ending stocks are forecast to decline significantly in 2018-19. Traders will also watch rains across Texas over the next week. Rainfall totals so far have been generally disappointing and forecasts are backing off of expected amounts for next week versus what models previously indicated. The longer-term price outlook will be driven by export demand. China increased its cotton import forecast for 2018-19. There’s hope China will more actively buy U.S. cotton over the next year. But that may depend on whether trade tensions between the two countries escalate or improve.
Hogs: Lean hog futures closed mixed and in the bottom 20% of the daily price range, failing to build on the strong reversal action on Thursday. October futures closed down 22.5 cents at $51.175 after earlier reaching $54.075, the highest in more than 2 weeks. December closed up 15 cents, with August down 17.5 cents. The initial rally lacked sustained buying after USDA released its monthly supply and demand report and midday wholesale pork prices came in lower again. The inability to sustain early gains suggests prices will likely test Thursday lows early next week, without a change in the wholesale market tone. Midday pork values slumped 38 cents with only hams and bellies showing any strength. This week’s kill is estimated at 2.333 million head, up 2.1% from a year ago. USDA cut both its 2018 and 2019 export projections Friday. While U.S. pork production was left unchanged at a record 21.9 billion bushels in 2018, USDA said 2019 output would rise to 22.92 billion pounds, 220 million more than forecast a month ago. Another week of good U.S. pork export sales were reported by USDA this week -- 16% above the prior four-week average. Also, U.S.-Mexican officials are getting closer to completing the framework for a revamped North American Free Trade Agreement. Both items failed to provide lasting support to the market and that underscores the supply problem.
Cattle: Live cattle futures and feeder cattle futures closed mostly higher Friday, paring weekly declines. Live cattle ended steady to 20 cents higher through the December contract. Feeder cattle posted gains of 20 to 65 cents through the November contract. The October and December futures tested their July 26 lows and bounced back to close above the 40-day moving average. That’s a positive sign for next week. Wholesale beef prices inched higher this week, lending support to the cash market outlook for next week. However, there is no shortage of market ready cattle. This week’s slaughter rose to 645,000 head from 636,000 a year ago. USDA raised its export outlook today. Sales are projected to increase 54 million pounds, to 3.124 billion pounds and the 2019 outlook was raised 40 million, to 3.204 billion pounds. Export sales need to continue to increase the next 30 days to cement the USDA forecasts. The dollar strengthened against most currencies today with the U.S. dollar Index rising to a 13-month high. A stronger dollar may reduce the competitiveness of U.S. supplies on the world market.