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
When is enough – enough? After getting pummeled in March to the tune of 94 cents, May Beans have stabilized so far in April – currently trading higher on the month! The Mar 9 Supply & Demand, the Mar 31 stocks & acreage & the April 11 S & D – all reminded traders of the big crops & record carryout! Much of these are dialed in – with decent exports & a weather premium dead ahead!
Corn & beans are two different animals – while May Beans easily made new lows for the year in March, May Corn didn’t & currently sits in the middle of its 2017 range (358-388).
- Corn acres are forecast to be down 4 MA – not up 6 MA!
- Historically speaking, corn is cheaper than beans- sitting on 7-8 year lows
- If early rain delays extend into late April, even less corn will be planted
- Exports are routinely running over 1 MMT evey Mon &Thur
- There’s no weather premium in the price
If any weather glitch occurs this season, prices are way too low!
May Wht is the outlier – May Corn & Beans are the dominant mkts in the grain complex – wht is most always the weak sister. But sensible arguments can be made for wht basing out as C & B establish weather premiums.
- WW acreage is the lowest in over 100 years
- The record world carry-out stocks are becoming dialed in
- The wht prices are on 10 year lows
- Some foreign crops have issues
We feel wht is thru going down – & will certainly rally with C & B as they implement weather premiums!
In the past 3 weeks, June Cat has dropped $5 (114-109) & then rallied $5 (109-114) – mostly off the expected 2nd Qtr increase in beef production. However, the massive $18-19 discount to cash is keeping the mkt honest & limiting the expected sell-off due to weakening cash. Also, talks with China about expanding exports has helped support the recent rally!
June Hogs are plagued with the same problems as June Cat – a big increase in 2nd Qtr Hog Production. But unlike the cattle, the June Hog contract does not have a big discount to cash! The only thing to offset big supplies would be solid Mexican Imports & so far, they haven’t been enough! As a result, June Hogs are on 6-month lows at $72.25!
Questions? Ask Bill Moore today at 312-264-4337
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