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
May Beans experienced a tumultuous week – that early Tues had the contract 30 cents higher on the week off favorable biodiesel rumors. However, they were later denied – but still the contract was able to eke out a 12 cent weekly gain! Early month fund buying met stiff resistance from the record Brazilian crop & mediocre exports!
FACTORS IMPACTING THE MKT
- EXPORTS –Mon Inspections were 704,000 (750-1,000) – Thur sales Were 427,000 (300-500)
- BIOFUEL RUMORS – proposed changes to biofuel would ultimately curb Imports from Argentina & led to a sharp rally in Beans Tuesday – at One time registering 35 cent gain – the rumors were later denied – but the issue is still being debated
- 2017 WEATHER OUTLOOK – HOT & DRY- and who could blame them after the historically mid winter so far!
- RECORD BRAZIL BEAN HARVEST – the latest estimates have pegged the crop at 108 MMT – easily a record & well over the USDA’s 104 MMT estimates
- WANING EXPORTS? – with no 8am solo announcements, there are Concerns the exports are tailing off – as South America’s harvest Comes to fruition
- TRUMP WILDCARD – after President Trump’s Tues nite speech, the DJI Went crazy – posting a 300 point gain & spilled over into the grains – Ideas that his tax cuts & reduced regulations would spur business are Kicking in!
- REFLATION TRADE – reflation means the funds think grains are too cheap & are buying them – who can argue?
As May Beans drifted to the low end of its 2017 range (1005 – 1085), the funds stepped in & bought – impressive action considering a record Brazilian crop & 4 million more US acres!
After a wild week of rumors & denials, May Corn emerged the best of any member of the grain complex – posting a weekly gain of 10 cents – closing at 380 ¾ – only 7 cents off the 2017 highs. While the bioduel rumors were denied, they still have traction, exports are impressive & US planting could be down 3-4 million acres!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,461,000 MMT (900 – 1,200) – Thur sales were 713,000 MT (700-900)
- BIODIESEL FUEL RUMORS –suggesting obligations would move from mRefiners to fuel blenders – if enacted, could dramatically increase Demand for corn – initially denied, this proposal is still being considered
- USDA REPORTS –the March Supply/Demand Report is due out Thur 3/9 & the planting intentions is scheduled for Fri Mar 31
- NO SNOW IN JAN & FEB – for the first time in 146 years, Chicago Has no measureable snow in the first two months of the year – Along with 60 or 70 degree temps – just a few weeks ago – could this be A harbinger?
- FUNDS THINK CORN IS CHEAP – and indeed it is – sitting on 7-8 year Lows – besides weather, there are several factors that could put $.50 – $1.00 on the mkt – much lower US acreage, solid exports, A lower US dollar & the Trump wildcard!
Needless to say, if the weather isn’t quite right this Spring & Summer, we’re way too cheap!
Much like Beans & Corn, May Wht experienced wild price swings this past week – ranging from 25 lower to 7 higher – before settling with a ho-hum 4 cent weekly gain! The biggest bullish input is the winter wheat crop – which is sorely in need of rain – added to the amazing fact that total WW acreage is the lowest in over 100 years. However, this input is doing battle with a big negative – record Bean crops forecast for South America!
FACTORS IMPACTING THE MKT
- EXPORTERS – Mon Inspections were 537,000 MT (350-550) – Thur sales Were 452,000MT (380-500)
- CORN & BEANS VOLATILITY – was ratcheted up last week off Biodiesel rumors & this spilled over into the wht mkt
- WINTER WHEAT – the trade is starting to get worried about warm & dry Weather in the plains – Illinois just had the warmest Feb on record & The 16th driest since 1895. Of course, its been well-chronicled that WW acreage is the lowest since the Cubs 1908 World Series win!
- US DROUGHT MONITOR – shows 87% of the plains are in an Abnormally dry to severe drought stage – compared to 26 % last year
- EGYPT – bought 535,000 MT of Wht from Russia, Ukraine & France – The largest purchase since 2014 – they have now purchased 1.255 MT Of world wht since 2/17
- REFLATE – has been a “catchword” & simply means the funds are Buying because it’s cheap – & you can’t argue with that – as wht Hovers just over 10 year lows!
With the lowest acreage in over 100 years, already worrisome dry conditions in the plains & a 10 year low price level, wht would be the least likely commodity to tolerate HOT & DRY going forward!
Apl Cat had a $4.00 weekly gain early Wed– but coughed up most of those gains closing the week out with a $1.00 gain! A mixed bag of fund. Is pushing & pulling!
- APL CATS DISCOUNT TO CASH –is a whopping $10 – when normally Its $2.00
- THE LAST COF –showed a hefty 11 % placements over last year
- PORK PRODUCTION – is expected to be at a record high this year & Beef production is up 2.9%
- BEEF PRODUCTION – from the 4th to 1st Qtr is showing the largest drop On record but the 1st to 2nd Qtr is expected to reflect a big increase!
- THE TRUMP RALLY – indicates a high level of consumer confidence – Good for beef demand
Apl Hogs are handcuffed by bearish supply fundamentals – which will come to fruition in the 2nd Qtr! The 1st to 2nd Qtr production decline is the smallest since 2002 – & this may well overcome the positives of a big discount to cash by Apl Hogs & very strong exports to Mexico! This would especially be true if Trump trade policies interfere with our Mexican trade! This could easily mean the $72.50 Feb high will be it for this year!
Questions? Ask Bill Moore today at 312-264-4337
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