Corn: Corn futures posted gains of 2 1/4 to 4 1/2 cents through the December 2019 contract. For the week, December corn futures firmed 5 1/2 cents. The bullish price response to USDA’s October crop reports on Thursday and today’s followthrough gives bulls the upper hand heading into next week. But next week’s price action will largely depend on whether funds remain active buyers. Since they have covered much of their once-hefty net short position, funds may soon have to decide if they want to build a net long or halt their buying. USDA surprised the market by lowering its yield and production estimates this month. With harvest losses due to heavy rains, snow and hurricane damage largely not factored into the October numbers, there are expectations those estimates will decline again in November. The USDA data and this week’s price action cements our ideas that the September lows were the seasonal lows.
Soybeans: Soybean futures enjoyed solid buying at week’s end that helped the market to settle high-range with gains around 9 cents. But for the week, prices are little changed, with the November contract settling 1 ½ cents lower. Rains recently chased Midwest farmers out of the fields and pushed the harvest pace behind the five-year average after an early and aggressive start. USDA’s crop progress and condition report will help traders gauge how quickly farmers were able to get back into the fields. As more combines get rolling, so will reports about how much damage the excessive rain caused. On Monday, National Oilseed Processors Association will also remind the trade of strong crush demand within the U.S. USDA this month surprised with a slight reduction to its bean crop estimate, largely due to a decrease in harvested acres. But the market will have to wait until USDA’s November update for the impact of adverse weather in the Midwest and the South to be factored into the department’s crop peg. Market action will also be driven by developments on the U.S./China trade front. While there are a lot of tensions between the nations right now, some efforts are currently underway for a meeting between the two nations’ leaders at the G20 summit in late November.
Wheat: Winter wheat contracts gained 9 to 10 1/4 cents today and finished high-range. For the week, December SRW lost 5 1/4 cents. December HRW futures closed steady from last Friday’s price level. Spring wheat closed up 3 cents last week. Wheat futures early next week are likely to see some follow-through buying from today’s gains and as USDA in its monthly supply and demand report Thursday trimmed its estimate of production in Russia and Australia. World carryover supplies were also reduced. And the Buenos Aires Grains Exchange on Thursday warned that dry weather and frost could clip this year’s Argentine wheat crop. However, gains in wheat futures will be limited by continued tepid demand for U.S. wheat on the world market. USDA in today's weekly export sales report reported 339,022 MT sold--30% less than the prior four-week average and the lowest in seven weeks. Spring wheat held firmer late this week as snow slowed harvesting and raised quality concerns in Canada. U.S. prices are competitive on the world market but new business has been slow to develop. Prices need to stay low to attract new overseas buying. USDA did cut global wheat supplies for 2018-19 by 3.2 million metric tons, which should limit the downside for U.S. wheat futures in the coming weeks.
Cotton: Futures jumped the most in a month to the highest since Sept. 26 on Friday, capping a weekly gain of 227 points, to 78.37 cents, basis December futures. Fears that Hurricane Michael did more extensive damage to the crop from Florida to Virginia supported new buying and short covering. USDA Chief Economist Rob Johansson said today that it was too early to come out with crop-loss estimates, but there was significant damage to cotton. All crops covered by insurance in the path of Michael was $1.9 billion, but damage may be higher, according to USDA Under Secretary for Farm Production and Conservation Bill Northey. USDA said weekly export sales rose to 98,000 bales, up 44% from the prior 4-week average. Still, China canceled 73,900 bales of prior purchases. Focus next week will be on more accurate assessments of damage Hurricane Michael caused in the Southeast. Some talk today in the market centered on losses of as much as 1 million bales. In addition, growers will be assessing damage from cold temperatures and rain from remnants of Tropical Storm Sergio this weekend across Texas, Oklahoma and Arkansas. After the recent lull in business, exports will be closely monitored to see if overseas buyers boost purchases after the recent drop in prices and indications the U.S. crop may be significantly smaller than the currently forecast. Global carryover is now seen at 74.45 million bales, down from 80.89 million last season.
Hogs: The October lean hog futures contract went off the board today at $68.75. December hogs gained 57 1/2 cents today, while the February contract was down 20 cents. Contracts finished nearer their daily lows. For the week, December hog futures lost $2.55. Despite Friday's modest gains in December futures, the technical price action late this week suggests the hog market has rolled over from its choppy uptrend, which could invite some chart-based selling pressure early next week, or at least limit any technical buying interest among traders. Still, the large price discount the December contract holds to the lean hog index should limit downside in futures in the near term. Another case of African swine fever was confirmed in Tianjin located southeast of Beijing, China's Ministry of Agriculture said Friday, as well as another case in Liaoning. These marked the fourth and fifth new cases reported this week in China. The outbreaks may help put a floor under prices, or even prompt some price advances in the coming weeks should the situation become worse.
Cattle: Cattle closed lower on Friday, with December futures losing $1.975 this week. November feeder cattle closed making new weekly lows and down $3.60 for the week. Persistent weakness in wholesale beef prices, falling to the lowest for the year last week, and rising corn prices may keep pressure on the fed and feeder cattle futures next week. The USDA releases its latest Cattle on Feed Report next Friday, with traders looking for continued record feedlot numbers. The cattle futures will need to see some strength develop in the wholesale beef market before buyers return. While grocers have focused meat specials this month on pork, the current prices for beef should be more attractive for November. However, Thanksgiving is early this year and that should limit any aggressive demand. Chicken remains cheap and an attractive alternative to hamburger.