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
The month of Mar for the May Bean contract has been dominated by bearish supply concerns- primarily the record Brazilian harvest currently underway! And on top of that is a US Bean crop predicted to be 4-5 million more acres than 2016! The net result is a mkt down 35 for the month – but only 8 cents for the week as it tries to stabilize!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 656,288 (500-700) – Thur sales Were 695,000 (400-600)
Mon (3-13) – 120,000 MT – Unk
Thur (3-16) – 120,000 MT – Unk
- MAR 9 USDA – bears repeating as it has cast a bearish pall Over the mkts ever since its issuance
US Stocks – 435 (414)
Global Stocks 82.8 (81.3)
Brazil 108 (104)
Arg 55.5 (55.1)
- BRAZILIAN HARVEST-has been estimated as high as 111 MT& is 75% in – They say big crops get bigger – but they also say “harv lows”kick in When harvest is roughly one-half over!
- US DOLLAR – lost almost 100 points on the heels of Janet Reno’s remarks Last Wed after she announced a ¼ % IR increase. Her dovish remarks About maybe only two more IR increases instead of 3 – ignited a Sharp sell-off in the US Dollar
- US ACREAGE- is widely rumored to be 4-5 million more acres than Last year – this has added to the bearishness created by the Brazilian & Argentine crops
- EXPORTS –have trailed off but are still adequate – for instance, Last week, we had two 8am announcements
- TECHNICALS-the mkt has descended to the low end of the 2017 range (1000-1085) – the psychologically important $10 level is trying To hold the mkt
The mkt is feeling the upcoming bearish supplies – but there is no weather premium in its price –just in case?
After plummeting 25 cents since late Feb, May Corn was able to stabilize last week – gaining 3 ½ cents. Whereas the Bean Complex is fighting bearish supplies in both hemispheres, Corn is looking at US acreage 4-5 million acres under 2016 & is sitting on 7-8 year lows. So when the grain complex breaks down, May Corn seems to hold up better than Beans & wheat!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,547,022 MMT (LW-1,450,003) Thur sales were 1.47 MMT (650 – 1.1)
Tues – 120,000 MT to Mexico
- USDA MAR 9- #’s weren’t as negative as Beans as US Stocks came in Right on expectations- however other #’s were higher than pre-report Guesses
US Stocks – 2,320 (2,320)
Global Stocks 220.7 (218.6)
Brazil 91.5 (86.5)
Arg 37.5 (36.6)
- US DOLLAR – ever since the Fed announced a ¼ % rate increase last week The US $ has tumbled as Janet Yellen implied there wouldn’t be as Many rate increases as previously thought
- WEATHER PREMIUM – as of today, May Corn has given up all its 2017 gains- with planting dead ahead, the mkt needs to allow for weather Issues – particularly after the mildest winter in recent memory
There’s plenty of corn to go around but that’s why the mkt is on 7-8 year lows! Should the irregular warm & dry weather patter continue into the growing season, then corn is too cheap – particularly with robust exports & a declining dollar!
After dropping over 30 cents since early Mar, the Mar Wht contract was able to stabilize last week – finishing the wk with a minor loss!
- THE WW BELT –got a drier forecast
- COLD TEMPS – returning to the plains renewed concerns of winterkill
- EGYPT- is buying at the fastest pace since the 2011-15
- RECORD WORLD STOCKS – continue to overhang the mkt
10 year lows, a shrinking dollar & weather-related rallies in C & B could rally wht sharply!
The mkt is giving off conflicting signals but continues to consolidate near the 2017 highs
- 2ND TO 1ST QTR INCREASE – in beef production has the mkt wary
- SURGING CASH MKT – reveals added demand – even after a $12 Rally since early Dec
- JUNE CAT’S WHOPPING DISCOUNT – to cash of almost $20 – means
The big 2nd Qtr increase in production is pretty well dialed in Apr Cat continues to defy analysts predictions of a top forming – by punching out new monthly highs!
Apl Hogs posted a $1.00 gain amidst its $6.00 2017 range (66.50-72.50) as offsetting factors kept the mkt range bound
- CHINA – could be a more active buyer as bird flu concerns could shift Demand from poultry to pork
- 2ND QTR PRODUCTION – is expected to be up 6% from last year
- RECENT CASH – has been strong – reflecting good demand For pork & bacon
Generally, solid demand is supporting both cat & hogs – even after substantial rallies since last Fall.
Questions? Ask Bill Moore today at 312-264-4337
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