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
Contrary to what we’ve heard from producers & observed in the Dakotas, the USDA 2 weeks ago Thur issued a very bearish report- raising the production to 4.381 BB – over last year’s record 4.307BB! Many are suspect of these high-ball #’s but you can’t fight city hall. Our feeling is that the final #’s will be less than the USDA August Report but it may take until harvest to confirm it!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were a whopping 1.352 MMT (400-850) –Mon inspections were 570,000 MT (lw-686,770)
- CROP RATINGS – gd/ex – 60%(59)
Ill – 60(63) Ind – 53(56) Iowa – 58(56)
- USDA AUG REPORT – 8/10/17
Production – 4.381 BB (4.165 – 4.260)
Yield 49.4 B/A (46.9-48.0)
Stocks 475 MB (369 – 474)
Global 97.8 MMT (89-94)
- PRO FARMER CROP TOUR – should shed further light on the crop size & Conditions- in this highly variable year – we would expect #’s somewhat Under the USDA’s
The $1.20 break (1040 – 920) since early July has already dialed in a record crop – should the harvest results come in the least bit disappointing, then the harvest lows are already in! All eyes will be on the Pro Farmer Tour results!
After breaking 40 cents since early July (415 – 375), the Dec Corn contract rallied into the Aug 10 USDA Report – only to be slapped down hard after a very bearish August USDA Report. Regardless of field reports reflecting a wide variance in crop conditions, the USDA nonetheless came in at 14,153 BB – well over the expected range. Many dispute the #’s but we’ll have to accept them for now!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 665,000 MT (450 – 600) & Thur sales were 1.352 MMT (400 – 850)
- AUG 10 USDA REPORT
Prod 14,153 BB (13,590 – 14,070)
Yield 169.8 B/A (162-168)
Stocks 475 MB (369-474)
Global 200 MMT (183 -200) Definitely, a bearish surprise & the mkt responded accordingly!
- CROP RATINGS – GD/EX – 62% (62) Ill – 54(62) Ind – 53(55) Iowa 61 (61) Dough – 76 (77) Dented 29(35)
- PRO FARMER CROP TOUR – renamed this year THE FARM JOURNAL TOUR – Has so far confirmed the variability in crop conditions that have been Widely known from early on in the growing season Ever since the USDA August Crop Report, Dec Corn has had its nose
To the ground – bearish weather has helped to keep the downtrend intact!
For the month, Dec Wht is down 70 cents (5.00 – 4.30)! Since the early July peak, it’s down $1.60 (590-430)! Prices are a far cry from levels reached after the “Dakota Drought” drove Minneapolis Spring Wht up over $3.00 in May/June. The main culprit for the down turn –
- Record World Ending Stocks
- Huge Russian Wht Crop – that keeps getting racheted up –Currently at 82 MMT
- A bearish USDA August Crop Report for corn & bean production
That is spilling over into the wht mkt
Oct Cat has been in a back-and-fill downtrend since 5/31 – currently sitting $18 off its highs (123-105). The main culprit has been excess production – following months of higher placements.
- Beef production for the 4th Qtr is a whopping 7.16 billion pounds –Up 8.14% over 2016
- 3rd-4t Qtr production is expected to increase by 335 million pounds Which would be a record – as it normally drops from the 3rd to 4th Qtr
- Cheap corn has exacerbated the down
Yesterday, Oct Cat put in a key reversal-up – which may have signified a low – certainly helped by the contract’s still hefty discount to cash!
Much like cattle, the Oct Hogs have been victimized by too much production. The 3rd-4th Qtr pork production is expected to be up 740 million pounds- the largest increase in 10 yers. With cheap corn & cooler weather, weights could continue to turn up. However, yesterdays key reversal up – along with Oct Hog’s still substantial discount to cash – coupled with Oct Cat’s reversal, could mean the mkt has finally cratered!
Questions? Ask Bill Moore today at 312-264-4337
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