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 world is awash in soybeans & the key USDA Reports in March certainly substantiated that! As a result, May Beans lost 92 cents for the month. The Mar 9 Report raised Brazil Beans to 108 MMT (104) & the Mar 31 Report raised US acres to 89.5 MA (LY-83) in addition, rains have delayed corn & wht planting – acres that may go to beans!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 620,800 MT (450-650) – Thur sales were 996,000 (350-550)
Thur – 165,000 MT to China
- USDA 3-9-17 SUPPLY & DEMAND – once again, higher than expected – Which ended up setting the tone for this month
US Stocks 2,320 MB (2,320)
GLOBAL 82.8 MMT (81.3)
BRAZIL BEANS 108.0 mmt (104)
ARG BEANS 55.6 MMT (55.5)
- USDA 3-31-17 QTLY STOCKS & ACREAGE
Qtly Stocks 1,735 MB
Pltd Acres 89.48 (Est – 88.12, LY – 83.4) 6 million more acres –even more than rumored (4-5 MA)- we’ll See if it comes to pass
- EARLY PLTG DELAYS – for corn in the Delta could mean more beans Planted later – but it is still a little early in the season for that scenario
- WEATHER PREMIUM ? Well one thing’s for certain – there is no Weather premium in this mkt after it went straight down since mid-Feb
- US DOLLAR – looked to have peaked in mid-Dec & even after a 100 point Rally, it’s still 300 points off its highs!
The supply news is bearish from both hemispheres – the question is how much is dialed in & will demand actually increase after the $1.40 break since Mid-Jan!
A quick look at the daily charts tells you that beans & corn are definitely a tale of two cities: May Corn lost 10 cents in March while May beans lost 89 cents!
- The record Brazilian Bean Crop impacts Beans more than Corn
- Corn acres are predicted to be down 4 MA – not up 6 MA like Beans
- Crude oil has rallied $5.00 – enhancing ethanol demand
- Early planting delays in corn imply less acreage
- Historically speaking, corn is cheaper than beans
At the very least, the mkt is entitled to some kind of weather premium – going into Spring Planting.
May Wht is the perennial “weak sister” to May Beans & Corn & as such will have a hard time rallying much without their help.
- $4.00 is a 10 year low & will provide substantial support
- The world wide glut of wht has largely been priced in
- At current levels, US Wht is competitive on the world mkt
- The Winter Wht Crop – while in pretty good shape – is still Not in the bin
If you like the grains, our recommended preference would be: CORN WHEAT BEANS
June Cat has broken $5.00 (114 -109) off its highs amidst conflicting fundamentals.
- The 1st to 2nd Qtr beef production shows a sizeable increase
- The beef mkt has shown weakness
- Packer margins are decreasing
- There’s a high net long open interest
On the plus side, June Cat is a whopping $18 under cash & the demand should be starting going into Easter W/E! So probably not too much more break from here!
Very simply put, the hog complex is inundated with too much supply.
- Pork Production from the 1st to 2nd Qtr is expected to decline by just 80 MP – the smallest decline since 2002
- Exports were hopefully going to pick up the slack but Mexico dropped From the Dec peak of 1.82 MP to 1.47 MP
- A slumping cattle mkt spilled over into the hog complex
On the bright side, Easter demand might be enough to prop up the mkt!
Questions? Ask Bill Moore today at 312-264-4337
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