Corn: Corn futures closed out a disappointing week of price action with losses of 2 1/2 to 3 3/4 cents through the July 2020 contract today. For the week, December corn futures dropped 6 3/4 cents. The corn market is struggling with poor demand, as exports and ethanol production are sluggish. As a result, upside potential is tied to crop worries. With harvest activity picking up across the Corn Belt, the upside will be capped next week even though traders anticipate a smaller crop estimate from USDA next month. USDA is going to resurvey harvested acres in North Dakota and Minnesota for the Nov. 8 Crop Production Report. Harvested acres are likely to come down in those states, as is yield. It’s likely going to take a rather sharp drop in the national numbers, however, to trigger a sustained upside price move in the corn market, especially given the demand concerns.
Soybeans: November soybeans closed up 2 1/2 cents at $9.34, with January beans gaining 2 1/4 cents to $9.47 1/2. For the week, January soybeans lost 3 cents. December soybean meal closed the day up $1.70 and December bean oil lost 3 points to 30.36 cents. Look for more sideways-to-higher price action next week as the near-term technical posture for soybeans remains bullish and is the most bullish seen in months. The big speculative funds that are still short soybeans are very squeamish and may bail out of more positions next week. Fundamentals are friendlier for soybeans, too. U.S. soybean weekly net export sales, reported today, rose to 1.6 MMT last week. China bought 850,500 MT tons last week. Recent wet, cold weather will continue to hinder the U.S. harvest and may have produced some quality problems.
Wheat: Winter wheat futures continued higher, closing Friday making new weekly highs. December SRW futures rose 6 ¾ cents to $5.32 ¼ on Friday, extending the weekly rally to 24 ¼ cents. December HRW wheat rose 2 ½ cents to $4.33 ¾ and up 14 ¼ for the week. December spring wheat fell 7 ½ cents to $5.44 ½ and down 3 ½ cents for the week. The rally in SRW is overextended and it would not be surprising to see HRW and spring wheat to gain against the SRW market in the near term. However, open interest has been rising in SRW since the September lows and that is a sign of internal strength. However, spring wheat futures open interest has been declining, a sign of internal weakness. The market remains supported by fund short covering but also strengthening world cash prices. Egypt bought Russian and French wheat this week at prices $9/ton higher than two week ago. While U.S. export sales remain quiet, the firming world markets remain supportive. USDA said exporters sold 395,100 metric tons (MT) last week, less than expected but on the weekly average needed to reach the USDA forecast for the season.
Cotton: December cotton futures closed up 17 points at 65.16 cents today. Prices today hit a more-than-three-month high and closed at a technically bullish weekly high close. For the week, December cotton gained 128 points. Look for some follow-through technical buying early next week, following the bullish weekly high close and the fact that cotton futures have been trending higher since the late-August contract low. The weekly USDA export sales report for cotton, out this morning, showed U.S. sales at 206,500 running bales (rb) for the 2019-20 marketing year, which is up 9% from last week and up 36% from the four-week average. There were no sales reported to China. China’s third-quarter economic growth slowed more than expected to 6.0%, it was reported Friday. That’s the slowest growth rate since the first quarter of 1992, when China started reporting quarterly economic data. Economists expect China’s economy to continue to slow amid pressures from the trade war with the U.S. and say Beijing’s hands are somewhat tied in enacting additional stimulus with its economy already saddled with heavy debt. That’s a negative for cotton producers hoping to get more Chinese demand for U.S. cotton in the coming months. On the positive side, the U.S. dollar index fell to a seven-week low on Friday.
Hogs: Lean hog futures finished 17 1/2 to 70 cents lower today. For the week, December hogs dropped $1.65. Hog traders ignored huge weekly export sales and shipments. While a rush of Chinese buying could have triggered panic buying by Mexico, Japan and South Korea, the numbers were too big to be believable. And apparently they were, as USDA said “significant quantities” were sales “that may have occurred in previous weeks.” Basically, the market already knew about some of the sales reported this morning. Even with a major pickup in export demand recently, traders remain concerned about record slaughter supplies, especially with futures trading at a premium to the cash market. China’s appetite for U.S. pork is likely to stay strong, as its hog numbers continue to tumble and pork shortages are putting upward pressure on consumer prices. At a minimum, that should keep a solid floor of support under the market. And traders should look to keep futures at premiums to the cash market, which is unusual for winter-month contracts.
Cattle: Futures fell Friday on lower cash markets. December fell 75 cents to close at $113.625, paring the weekly gain to $1.475. February cattle dropped 47.5 cents on today to $119.075, and up $1.025 for the week. The market was overbought after one of its biggest September-October rallies. The market’s ability to bounce off session lows that pushed prices lower on the week for a time this morning was a positive signal for continued strong demand. Cattle feeders were fearful the rally in cash cattle and beef was ending and quickly sold cattle today in Kansas and Texas $1 lower than last week, a reversal of early-week expectations for higher cash prices this week. Cargill stopped receiving cattle for slaughter at its Dodge City, Kansas, beef plant after an explosion on Thursday but it expects to resume receiving cattle "early next week," a company spokesman said on Friday. The company continues to process carcasses it had on hand at the time of the Thursday explosion, which occurred in a stand-alone building outside the main facility and injured two workers, spokesman Daniel Sullivan told Reuters. Traders will be looking for light placements in September in the Oct. 25 USDA Cattle on Feed report.