Wheat futures took sizable losses Friday on spillover selling from the corn pit. World wheat supplies and U.S. dollar strength are critical for export demand. Cash cattle should maintain steady tone this week. Slaughter market is still looking for those missing hogs. If they show up, it could slide prices. Weather forecasts and fund selling hammered corn futures.
Thats the view of the commodities markets this week from the analysts at Pro-Farmer America in Cedar Falls, Iowa.
Wheat analysis5-DAY OUTLOOK: Wheat futures ended with sizable losses Friday on spillover selling from the corn market. Even though wheat traders dont have to be as concerned with U.S. weather as corn traders, the emotional spillover from the corn pit is hard to ignore.Wheat will still struggle to separate itself from corn this week. And with the wheat/corn spread nearing 75 cents, any additional corn losses will anchor wheat. While we eventually expect wheat to push this spread out to more traditional levels of $1-plus, that wont happen this week.
30-DAY OUTLOOK: Watch the world wheat picture during this time period. Traders have been hesitant to focus on shrinking world wheat stocks until export buyers step up orders for U.S. wheat. Now with Canada and Australia both experiencing crop problems, improved buyer interest may be just around the corner. Confirmed export business will bring higher prices.
90-DAY OUTLOOK: The U.S. dollar remains a long-term thorn in the side of wheat producers. A 50% rise in the value of the U.S. dollar since 1995 has made it very difficult for the U.S. to maintain export market share.
Cattle analysis5-DAY OUTLOOK: Live cattle futures were lower on light profit-taking ahead of Friday afternoons Cattle on Feed and Cold Storage Reports. The Cattle on Feed data gets a mixed read and should encourage bull spreading Monday. The data does nothing to suggest that cash cattle prices wont be able to maintain the steady to firm tone again this week. But beef prices must prove that a short-term low is in and build on this weeks gains.
30-DAY OUTLOOK: Beef demand will be critical over the next month, as this is typically the slowest period during the summer months. That hasnt been the case the last several years, however. If beef demand runs stronger-than-expected during the next month, the market should be able to continue chewing through supplies in an orderly fashion.
90-DAY OUTLOOK: The heavy Placements this summer point to heavy cattle numbers to close out the year. Stay in touch for 4th-qtr. hedge coverage on a move above the contract highs.
Hog analysis5-DAY OUTLOOK: Lean hog futures were mostly lower on light profit-taking ahead of the weekend. The cash hog market will take center stage this week. Cash prices began to soften late last week. If that weakness carries over into this week, futures will feel pressure. And its likely cash bids will continue to decline, as packer profit margins are poor and pork demand is light. That takes away packers incentive to bid for animals.
30-DAY OUTLOOK: Slaughter numbers will be watched closely over the next month. Slaughter continues to come in well under forecast levels. If those "missing" hogs start to show up, cash hog prices will go into more than a typical seasonal slide that is unless pork demand is tremendous.
90-DAY OUTLOOK: The September Hogs & Pigs Report will hopefully shed some light on the "missing" hog mystery. If the lighter-than-expected slaughter numbers are the result of producers holding back gilts for breeding purposes, it will spell trouble down the road for the hog market.
Corn analysis5-DAY OUTLOOOK: Corn futures were hammered by moderating forecasts and aggressive fund selling to close out the week. Mother Nature holds the key to price action this week. If conditions flip back to hot and dry, traders will respond by aggressively adding a weather premium onto current prices. If temps are oppressive and rains continue to fall on the Corn Belt, the negative psychology of "rain makes grain" will be hard to ignore.
30-DAY OUTLOOK: The weather through pollination and into the ear development stage of the growing season is very critical. Theres no doubt the crop has already been nipped this year. But at this time, the market is unwilling to bank on big crop damage.
90-DAY OUTLOOK: The late planting of the crop in the northwestern Corn Belt makes early fall weather conditions more critical. A late fall could add to the crop while a early freeze would definitely lower crop size.