William Moore's market views are centered around his many relationships with Agricultural producers. His weekly newsletter, AGMASTER, provides a blend of fundamental & technical information used to make prudent hedging decisions. Contact Mr. Moore at (312) 264-4337
A myriad of factors have forced a 50 cent decline in Mar Beans – in the past two weeks – but the biggest clearly is an improvement in South American weather! However also contributing would be trade war fears (Mexico & China) & general mkt instability following Trumps recent immigration policy announcements!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,630,581 MMT (900-1,200) – Thur sales Were 539,000 MT (450-650)
Tues (1-24) 163,000 MT Unk
112,00 MT Mexico
- INFORMA – predicts Bean acres 88.6 MA (83.4 LY) – with 47.1 yield This equates to a 4.153 BB crop (4.307 –LY)
- TRADE WARS – with tough talk to Mexico about “the wall” & import tariffs, The mkt is concerned our trade with them will diminish- we don’t see that Happening – as the new administration will surely strike a balance Between immigration policies & a healthy trade!
- LUNAR NEW YEAR HOLIDAY – will extend thru the end of this week & will Keep China in a “low profile mode”
- SOUTH AMERICA – flooding concerns for Argentina have waned & some feel Good conditions in Brazil will more than offset the loss of production in Arg
- US DOLLAR – while the US Dollar has not lately extended its down – It’s still hovering 300 points off its late Dec Highs – as it appears the 14 year highs posted late Dec may be a near term high
- IMMIGRATION UNREST – injected some uncertainty into the mkt place – today And this translated into a negative–
The mkt is worried about trade wars, S/A got better & China is on holiday – so the mkt reacted down as you’d suspect!
After rallying nearly 20 cents (352 – 371) since Jan 1, Mar Corn gave back 60% of those gains – yet still finishing the month with an 8 cent gain. Improving S/A weather, lingering concerns about a trade war with Mexico & general angst over immigration policies were partially offset by solid exports!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 963,897 MT(750-950) – Thur sales were 1.370 MMT (700 – 1.0000)
Mon – 105,000 MT to Columbia
Tues (1-24) 125,000 MT to Unk
- INFORMA- estimated corn acres at 90.5 MA (LY – 94.00) – with a yield of 170.4, a 14.170BB crop is projected (LY – 15,148)
- FRIENDLY NEWS DIALED IN – with a rising open interest accompanying The rally, many feel the positive news has been discounted
- MEXICO – talk of Trump building a wall forced their President to cancel His visit & raised concerns of a possible trade war – yet when all the smoke Cleared, we don’t see it – Mexico & the US need each other – tradewise!
- 7-8 YEAR LOWS – the mkt is plenty cheap already – having absorbed bearish Supply news for 3 years now
- US DOLLAR – closed on a 2 month low today – some 400 points off Their late Dec Highs – a weaker dollar in 2017 would go a long way toward Rallying the grain complex in 2017
- ARG & BRAZIL – some analysts feel the excessive flooding in Argentina could be offset by improved crop prospects for Brazil
After breaking above Mar Corn’s 3-month trading range (344 – 368), benign South American weather reeled the mkt back in!
Just two weeks ago, Mar Wht traded at 435 – but this past Mon, it traded down to 412 – then today back up to 435- some 40 cents off its Dec lows! So why the volatility?
- Earlier this week, the Mar Dollar traded to a 3-month low – making our Wht much more competitive on the world mkt
- Jan was one of the least snowiest months on record- meaning
- a minimal Snow cover for winter wheat – thus jeopardizing the crop!
- Wht always benefits from the spiller-over of S/A weather rallies of Corn & beans
- The short OI is at a high level – & the mkt is sitting on 10 year lows!
After a $23 run-up (98-121) since Mid-Oct, Feb Cat was entitled to a correction & indeed it happened this past week with a $6 drop (121-115). The USDA & President Trump get a big assist for this.
- The Jan COF reported a whopping 18 % placed on feed – much higher Than expected
- The 1-31 Cattle Inventory reported a 2% increase in the cattle herd –
- Trade Wars are feared due to Trump’s early actions – & they might jeopardize exports
Still , Feb Cat’s sizeable discount to cash has tempered the down!
Feb Hogs have had a very impressive week – rallying over $3.00 (67-70) despite ‘trade war fears”, bearish cattle reports & a slumping Feb Cat mkt.
- LAST FRIDAY –the Jan COF Report showed placements 18 % over last yr
- TUES USDA CATTLE INVENTORY – showed the herds are still expanding
- TRUMPS TOUGH TALK WITH MEXICO- may adversely affect pork exports
- FEB CAT – lost $3.00 last week due to the flurry of negative USDA reports
Yet Pork’s strong cash mkt , a still solid export demand & June Hogs $16 discount to cash have kept Hogs strong!
Questions? Ask Bill Moore today at 312-264-4337
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