Corn futures closed 11 to 14 cents lower on Friday. Although today’s WASDE report was quite bullish for corn, futures posted double digit losses as traders secured profits amid record high corn prices. Today, the nearby December contract hit a new record high at $8.49 after USDA slashed production and yield estimates. A few key elements from today’s WASDE report are as follows: Corn production estimates were pegged at 10.779 billion bushels, while production yields were lowered to 123.4 bushels per acre. Old crop ending stocks were reported at 1.021 billion bushels, while new crop ending stocks were forecast at 650 million bushels. USDA’s balance sheet also showed a dramatic decline in projected use, with season average prices expected to fall between $7.50 and $8.90.
Soybean futures closed 18 cents higher on Friday. Soybean prices held on to steady gains post USDA’s supply/demand report. Today’s report was all around bullish for the soybean market. As expected USDA slashed soybean production and yield estimates in response to severe drought conditions across the much of U.S. Soybean production was estimated on the low end of trade expectations at 2.692 billion bushels versus 3.050 billion bushels in the previous report, thus causing the market to maintain higher prices to ration demand. Yield estimates were lowered to 36.1 bushels per acre, a 4.4 bushel per acre reduction from the previous month’s estimate. Another significant sale of soybeans to China was reported by USDA this morning. The export sale totaled 290,000 tonnes for 2012/13 delivery which also helped to boost market prices.
Wheat futures closed 22 to 26 cents lower on Friday. There’s no doubt that today’s report was overall bearish for the market, causing double digit losses across all three exchanges. USDA raised domestic ending stocks to 698 million bushels, surpassing analysts’ highest estimate of 673 million bushels. Domestic production is also expected to increase to 2.268 billion bushels versus 2.224 billion bushels last month. Global figures were bearish as well. USDA lowered world production and ending stocks by a considerably smaller percentage than expected, despite considerable reductions and key wheat producing countries. However do the extreme situation for corn and soybeans, USDA raised average farm prices for wheat sharply $7.60-$9.00 per bushel.
Live cattle futures closed lower on Friday. Cattle futures remained lower much of the session today, pressured by sluggish cash trade and profit taking, despite bullish market factors. Preliminary asking prices remain steady at $121 in the South and $190+ in the North with some trade in the north reported $3 to $5 higher. Notably, USDA slashed corn production output and yield expectations for the 2012/13 corn crop signifying higher feed prices for cattle producers, which should support deferred contracts in the future. The season average price for corn is expected to be between $7.50 and 8.90. Midday beef cutout prices were higher for the third consecutive day, signaling improved beef demand ahead of the Labor Day holiday.
Lean hog futures closed mixed on Friday. Choppy trades characterized the market after midday as nearby contracts began to pull back. Midday hog futures garnered strength for higher pork prices and end of the week short covering. Although the October and December contracts closed lower, 2013 contracts were lifted by expectation of higher corn prices and decreased pork production due to herd liquidation. USDA projected season average prices expected to fall between $7.50 and 8.90. The October contract settled at $75.65, down 42 cents while December closed 5 cents lower at $73.45.