Grain and cattle futures closed lower on Friday, with hogs higher and closing into contract highs.
Corn Disappoints
Kent Beadle with Paradigm Futures says corn futures ended lower on Friday and were down nearly 2-cents for the week, a disappointing finish.
He chalks it up to profit taking heading into the weekend, hedge and harvest pressure as well as profit taking after the run corn has had off the lows.
Beadle says there was also some positioning already ahead of the September WASDE.
However, December corn at least held the 50-day moving average support area.
Is the Corn Crop Getting Smaller?
Private estimates out this week showed a corn yield that was only slightly lower than USDA’s August print of 188.8.
Beadle thinks that may be too high with all of the disease and drought issues clients are reporting on corn.
“Early yield reports show that disease did take off bushels,” he says.
Will USDA Lower Corn Yield in the WASDE?
Beadle thinks USDA may lower yield but not as much as the trade would expect.
He says they will be doing some field surveys but are also relying on satellite and weather data which may not adequately factor in the adversity the crop saw late in the season that will ultimately cut production.
Soybeans Hold Support For Now
Soybeans also closed lower on Friday and were down on the November contract 28 cents for the week.
November did hold the 200-day moving average and other key support but Beadle is less optimistic it will hold longer term.
“I think the September WASDE could show higher pod counts on soybeans, plus the market is still waiting for China business to surface in the export market,” he says.
Is China Buying Under Unknown Destinations?
China is waiting out the U.S. on soybean purchases to get a better trade deal, and while they have not bought any new crop soybeans they may be slipping under the radar.
Unknown destinations have bought nearly 133 million bu. of new crop beans and Beadle thinks China could easily account for half of that.
He also thinks China has to eventually buy soybeans and can’t get through the marketing year sourcing South American beans alone.
Wheat Sees More Contract Lows
Wheat futures hit more contract lows in all three classes and posted lower weekly closes as well.
What will it take for wheat to finally bottom?
Beadle isn’t sure because the funds have been short in the market nearly two years and they continue to be rewarded for it.
Cattle Futures Due for a Bigger Correction?
Live and feeder cattle futures were lower on Friday and posted the first lower weekly closes since June.
Beadle says it was tied to profit taking and lower cash trade in the North.
A light trade was reported on Wednesday and Thursday. Southern live deals were at mostly $242 with a few up to $243, steady to $1 higher than the prior week’s weighted averages. Northern dressed business was marked at mostly $383, $2 lower than the previous week’s weighted average basis Nebraska. A Regional in that area paid as much at $387 to $388 for a few cattle later in the week.
However, the market was overbought and due for a bigger correction.
Lean Hogs Make New Highs
Lean hog futures closed higher on Friday and for the week and made new contract highs in many months in the process.
Beadle says its being driven by fund buying but there are some fundamental reasons.
Slaughter pace increases this time of year but so far is not ramping up as fast as expected which is helping the cash market to hold firm.
Cutouts were also higher on the close, up $2.55 at $115.87.
