|Hogs: Afternoon Comments (Friday, October 21, 2016 20:07:57)
Lean hog futures benefited from light short-covering today to end the day 70 cents to $1.30 higher, with deferred futures leading gains amid bear spreading. For the week, December lean hog futures posted a 37 1/2 cent loss and February hogs posted a much steeper $1.55 loss. Bears clearly hold the reins in the hog market and upside potential will remain limited next week to short-covering given large supplies and demand concerns. This afternoon's Cold Storage Report (check "Evening Report" for full details) came in higher than expected and will likely add to price weakness. Additionally, packers have no incentive to raise cash hog bids as they work through the backlog of supplies in the Southeast. This week's slaughter of 2.514 million head topped official weekly capacity due to Sunday slaughter plans, but by next week, the backlog should be worked through the system.
|Soybeans: Afternoon Comments (Friday, October 21, 2016 20:10:48)
Soybean futures ended the day high-range with gains around 7 cents. November soybeans posted a weekly gain of 20 1/2 cents and January futures posted a weekly gain of 22 cents. Funds bought an estimated net 5,000 soybean contracts (25 million bu.) today. Bulls clearly have the advantage heading into next week and this week's gains are impressive in light of ongoing harvest activity and strength in the dollar index. But gains in the dollar were countered by another impressive week of export demand, primarily to China. As long as demand remains strong, downside risk should be limited. However, it's important to note that futures bumped up against resistance at the top of the two-month trading range this week and were not able to move above these tough barriers. Doing so would be a positive sign the market has started its next leg higher.
|Corn: Afternoon Comments (Friday, October 21, 2016 20:09:42)
Corn futures finished around a penny higher today. For the week, December corn futures dropped 2 cents. Corn futures paused this week following the breakout above key resistance last week. Corn should be ready to extend gains from the late August lows after a brief pause, but will need supportive demand news to fuel a further price advance. We expect harvest to be around 60% complete as of Sunday, which means seasonal pressure should ease. While seasonal pressure on futures will ease as harvest moves into the latter stages, basis could come under pressure as contracted supplies and "extra" bushels that won't fit in on-farm storage come to town. As harvest progresses, more attention will be on export demand, which has been very strong.
|Wheat: Afternoon Comments (Friday, October 21, 2016 20:11:47)
SRW and HRS wheat futures settled around 2 cents lower for the day, while HRW wheat posted losses of around a penny. Most SRW wheat contracts ended near steady with last week's close, though the front-month did post a loss for the week. Wheat futures held up relatively well in the face of strength in the U.S. dollar index this week, but the performance of the greenback will remain a key focus of attention due to its influence on trade. Demand for U.S. wheat supplies has improved, in part due to quality issues with the global wheat crop. But that could change if the dollar continues to rise. Dryness has recently encouraged some bouts of short-covering in the wheat market. And the forecast for above-normal temps and below-normal precip for the Central and Southern Plains signals such concerns may continue to support the market. The latest Drought Monitor showed some additional drought expansion in western Kansas, eastern Oklahoma and in the Texas Panhandle and Gulf regions.
|Cotton: Afternoon Comments (Friday, October 21, 2016 20:13:03)
Cotton futures faced followthrough selling today after yesterday's big downside breakout. The market ended 54 to 73 points lower, with the December contract leading losses. For the week, cotton futures posted moderate losses. A renewed surge in the U.S. dollar index Thursday and Friday gave traders incentive to book profits in the cotton market, triggering some technical-based selling on the move below the five-day moving average. Thus, how the greenback performs next week will likely be a major price driver for cotton. Prices are trading back near the midpoint of a wide trading range stretching from the August low to the September high. The Climate Prediction Service calls for a hot, dry November for cotton country. This is a favorable forecast for speeding along cotton harvest, which is already running ahead of the five-year average pace. The flow of fresh supplies to market will likely continue to limit the market's upside in the weeks ahead.