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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Past results are not necessarily indicative of future results. Investing in futures can involve substantial risk of loss & is not suitable for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The Price Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author. Trading in futures contracts, options on futures contracts, and forward contracts is not suitable for all investors and involves substantial risks. ©2017
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