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 mkt eagerly anticipated the May 10 Supply & Demand from the USDA – looking for a little good news – and it got it! Both bean & corn production estimates came in under last year’s record crops – as well, world carry-out for corn & beans came in under 2016 especially in corn! But alas, the 800 pound gorilla in the room is still planting – and with clearing weather ahead, it’s going well!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 349,385 (300-450) – Thur sales were 451,000 MMT (250-550)
- WED 5/10/17 USDA REPORT
Bean Production – 4.255 BB (LY -4.307)
US 17-18 Stocks 480 MB (572 – exp)
Global 17-18 Stocks – 88.8 MMT (87.4 – exp)
Brazil Beans 111.6 MMT (111.3 – exp)
Arg Beans – 57.0 MMT (56 – exp)
The #’s were neutral to friendly but all the mkt cares about now Is planting – which is going well – despite recent rain delays
- PLTG PROGRESS – the crop is 32% in ( lw-14 avg 32)
Ill – 23(31) Ind – 23 (31) Iowa – 40(32)
- RUSSIAN RUMORS – exports have noticeably dropped off but this morning, rumors abounded that the Ruskies were sniffing Around for some of our beans
- OUTSIDE MKTS – the US dollar & crude oil are key auxiliary mkts
That are headed the right way to benefit the grain complex – with The US Dollar 500 points off its Dec highs & June Crude Oil $5.00 Off its spike low of just a few weeks ago!
The range bound July Beans contract may have dialed in much of the bearish supply – & is in dire need of a weather premium – but that will probably have to wait until after planting is completed.
The 5/10/17 Crop Report was decidedly friendly for corn as production was pegged at over 1 billion bushel under last year’s record 15,148 BB crop. Furthermore world carry-out was predicted to drop 27.6 MMT (223.9 – 195.3). The mkt took the news well closing at 374 on report day! But then the reality of a very strong active planting campaign sunk in – dropping the mkt 6 cents from this level after report day!
FACTORS IMPACTING THEMKT
- EXPORTS – Mon Inspections were 1,395 MMT (800-1000) – Thur sales Were 332,000 MT (600-1050)
- PLTG PROGRESS – is 71% in ( lw-47 avg-70) – emerged – 31% ( lw-15 avg-36)
Ill – 75 (77) Ind – 56 (62) Iowa – 85(75)
- JUNE USDA CROP REPORT – very friendly production & carry-out #’s
Corn Production 14.065 BB ( ly- 15.148)
US 17-18 Stocks 2.110BB ( ly-2.111)
Global Stocks 195.3 MMT ( exp-208)
Brazil Corn 96 MMT (exp – 94.3)
Arg Corn 40 MMT ( exp-38.5)
- PLANTING DELAYS? Have been neutralized by the producers amazing ability to get a lot planted in a very short period of time – with their work ethic & Sophisticated machinery –as a result, planting progress currently matches The 5-year average! Many states in the Western Corn belt advanced 30% from a week ago!
- BIG SHORT OPEN INTEREST –of 208,642 contracts looms over the mkt – With many convinced another bumper crop is on the way – however Should that not transpire, “them shorts make real good buyers”!
- WEATHHER PREMIUM – to be sure, there is none right now – the mkt May well wait until after planting to put one in!
Despite a friendly May Crop Report & 3-4 million less acres, the July Corn contract is mired in a sideways range ( 362-378) & probably will be until planting is completed.
Despite some inclement weather in the plains, July Wht has nose-dived during the month of May – losing 35 cents (460-425) from high to low! Fundamentals abroad ave trumped those domestically – as benign weather in Europe, the Black Sea & Canada – promising better crops – have weighed on the mkt!
- The USDA 5/10/17 Report came out neutral as 17-18 US Stocks were Under guesses & 17-18 Global stocks were over
- WW ratings dropped from 53 to 51% & Spring Wht Pltg is ahead at 78% (avg – 73)
- The managed money short position is 124,638 – pretty hefty for now
- Early excess moisture in the plains- originally considered to be harmful Is now thought to be advantageous to the developing crops
- Weather premiums in Corn & Beans should soon appear & will spill over
In just 2 weeks time, June Cat has lost $14 (134-120) as increased plmts & mkt ready supplies have weighed heavily on a mkt – that was extremely overbought at its peak of 134 on May 4. But now the tables have been reversed & the mkt is extremely oversold – sitting at a $15 discount to cash.
- After a long hiatus, China will begin importing US beef again by July 16 But its impact may be slow developing
- Surging beef prices have kept the mkt honest
- Increasing placements in the past 3-4 months have made the mkt Fearful bigger supplies are right around the corner
- However, the huge discount to cash June Cat holds to cash Has already factored in increasing supplies
- Barbeque & restaurant demand remain strong heading into MD W/E!
During a similar time period, while June Cat was breaking $14, June Hogs were able to rally $3.00 (74.50-77.50) – so what happened?
- June Cat’s meteoric rise in April & earl May rendered June Hogs entirely
- Too cheap as consumers opted for the “white meat”
- Surging cash values pushed cut-out to its highest level since Feb 15
- Seasonally tightening pork supplies are helping the price action
- The export mkt has been very strong – & has added to stout domestic :”D”
- Going into Memorial Day W/E!
June Hogs have assumed the upside leadership of the meat complex!
Questions? Ask Bill Moore today at 312-264-4337
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