Corn: December corn futures rose 4 3/4 cents to $5.41 1/2 per bushel, up 15 cents, or 2.8% from last Friday. The corn market ended the week on a strong note despite bearish supply implications of USDA’s grain stocks report, suggesting the market may see follow-through gains next week. Monday’s weekly USDA Crop Progress report is likely to show little change in crop conditions, along with a sizeable advance in the percent of the crop harvested. Corn likely benefited from strength in the wheat markets. Strength in U.S. equity indices, even amid more inflationary signals, and in energy futures may also lend support next week. History suggests the corn market will face cash market pressure as the harvest moves closer to completion later this month. Expectations for an upward revision to the U.S. corn crop in USDA’s Oct. 12 Crop Production report may also weigh on prices during the first half of the month.
Soybeans: November soybeans fell 9 1/2 cents to $12.46 1/2 a bushel, down 3.0% on the week and the lowest settlement since $11.86 1/4 on March 30. December soybean meal futures fell $1.80 to $326.90 per ton, while December soybean oil rose 13 points to 58.82 cents per pound. USDA’s Sept. 1 stocks estimate was a game changer for the soybean market, putting bears solidly in control. With harvest accelerating and yields coming in generally strong, soybeans will likely need support from corn and wheat to stave off additional selling pressure. The Sept. 1 stocks figure added 81 million bu. to 2021-22 beginning stocks. If USDA raises this year’s crop estimate in the Oct. 12 Crop Production Report, as we suspect, projected ending stocks for 2021-22 could climb to 300 million bu. or above. At that level, it would be difficult to justify current prices. Given the dramatic change in the fundamental outlook, rallies should be viewed as selling opportunities.
Wheat: December SRW futures rose 29 3/4 cents to $7.55 1/4 a bushel, up 4.4% for the week and the highest closing price since $7.75 on Aug. 16. December HRW futures gained 27 3/4 cents to $7.59 1/2, up 5.5% on the week and the highest settlement in the lifetime of the contract. December spring wheat futures rose 16 1/2 cents to $9.29. Solid gains late this week may prompt some follow-through chart-based buying early next week. However, SRW and HRW futures are now short-term overbought technically and due for normal corrective pullbacks soon. Next week may begin to answer one question on many traders’ minds: Will wheat lead the other grain futures higher, or will soybeans lead grain futures lower? The overall fundamental picture, specifically shrinking global supplies, should keep sellers from getting too aggressive in coming weeks. USDA reported U.S. wheat stockpiles as of Sept. 1 at a 14-year low. Also, traders will watch Russia, which may further restrict its wheat exports after drought cut the country’s harvest, according to recent reports.
Cotton: December cotton futures fell 127 points to $1.0453 a pound, up 8.9% from 95.99 cents at the end of last week. Earlier today, December hit $1.0728, a contract high for the fifth day in a row. Cotton futures paused from a steep rally that began nearly two weeks ago and send nearby cotton futures to the highest levels in a decade. Key questions for next week include whether the rally can be sustained or has reached an exhaustion point. December futures’ lower settlement today, after reaching a contract high earlier in the day, may be a bearish technical harbinger. U.S. equities, the U.S. dollar index and crude oil may influence cotton’s direction next week. Nymex crude futures ended the day around $75.68 a barrel, the market’s sixth consecutive weekly gain. USDA will update harvest progress Monday. The U.S. crop was 11% harvested as of Sept. 26, about 3 percentage points behind the average pace. Excess rains in some top U.S. cotton regions has stirred concern over harvest progress and crop quality. The U.S. Delta “remains a little too wet and frequent showers will continue over the coming week, keeping field progress slow or on hold,” World Weather Inc. said today.
Cattle: December live cattle fell 52.5 cents to $125.20 per hundredweight, down 2.3% from $128.15 at the end of last week and the lowest closing price since $124.975 on April 29. November feeder cattle ended unchanged at $152.90, down 3.6% for the week. Choice boxed beef fell $2.62 today to $292.36, the lowest since $289.34 on Aug. 4. Those losses, along with persistent futures weakness, apparently persuaded producers to cut their asking prices. Live steers in five top feedlot areas averaged $122.65, down from $123.64 at the end of last week and the fifth consecutive weekly decline. End-of-week steer prices are down 2.6% from a peak of $125.98 on Aug. 27. And while seasonal patterns suggest the wholesale market is due for a seasonal reversal and subsequent rally into spring 2022, the sustained nature of the recent decline, as well as the still-elevated cost of wholesale beef, suggest traders will probably remain bearish through the early part of next week. Cattle slaughter this week was an estimated 637,000 head, down 0.6% from last week and down 4.1% from the same week in 2020, USDA reported.
Hogs: December lean hogs fell 22.5 cents to $85.175 per hundredweight, but still gained 11.0% from $76.80 at the end of last week. Other contracts ended slightly higher. Hog futures largely hit pause today after posting steep gains earlier this week in response to unexpectedly low herd estimates in USDA’s Hogs and Pigs report Sept. 24. The tighter supply outlook and continued strength in wholesale pork may push futures even higher next week. Pork carcass cutout values fell $2.90 today to an average of $113.39, still up 2.4% for the week, according to USDA data. Movement was strong at about 332 loads. A few key chart levels may pose resistance to further upside in December futures, including the contract’s July high at $86.25 and the contract high at $89.55, reached June 10. This week’s hog slaughter, at an estimated 2.52 million head, was down 2.1% from last week and down 3.4% from the same week in 2020, underscoring the limited supply outlook.