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
Since Labor Day, Nov Beans have languished in a 50-cent range (940-985) – with offsetting fundamentals keeping it under wraps! (HARVEST, EXPORTS, SOUTH AMERICA, US DOLLAR, USDA REPORTS) – that is until last Thur when a basically neutral USDA crop report ignited the mkt upside & to its highest close since early August! Has the worm turned?
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,770,324 MMT (1.1 – 1.4) – Fri sales Were 1.75 MMT (600 – 2.0)
Oct 16 – 227,300 MT Unk
Oct 11 – 264,000 MT China
Oct 11 – 132,000 MT Mexico
Oct 10- 131,000 MT China
- USDA REPORT – 10/12/17
Bean Prod – 4.431 BB (Est-4.439, Sept – 4.431)
Yield 49.5 B/A (Est – 49.8, Sept – 49.9)
US Stocks 430 MB (Est – 453, Sept – 475)
Global 96.1 MMT (Est – 96.5, Sept – 97.5)
The yield reduction leading to an unchanged # from Sept – was Friendly & refuted the old notion that “BIG CROPS GET BIGGER”!
- HARV PROGRESS – % Done – 49(LW – 36, Avg – 60)
Ill – 63 (58) Ind – 52 (52) Iowa – 32 (66)
- SOUTH AMERICA – too dry in the North & too wet in the South Has hampered their planting efforts
- TECHNICAL UPSIDE BREAK-OUT – on a neutral report – no less – Is very impressive & led to the highest weekly close since Aug 1
Big Crops don’t always get bigger – especially with the Sept dryness we’ve had – the USDA Oct Report is a solid testimonial to that! It seems to validate that “harvest lows” were put in Mid-Aug & that the record crop is dialed in!
The corn #’s on the OCT CROP REPORT were more on the negative side with production, yields & carry-out all slightly higher than expected & higher than last month! However, the initial spike-down was met with solid buying & turned into a key reversal upside & a higher weekly close! Indeed, spillover support from Nov Beans helped pull Dec Corn higher!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 322,672 MT (600-800) – Fri sales were 1.6 MMT (700- 1.7)!
Oct 12 – 120,000 MT Mexico
Oct 11 – 150,000 MT Mexico
- USDA REPORT – 10/12/17
Corn Prod – 14,280 BB (Est – 14,168, Sept – 14,184)
Yield – 171.8 B/A (Est – 169.7, Sept – 168.6)
US Stocks – 2,340 MB (Est – 2,249, Sept – 2,325)
Global – 201 MMT (Est – 201.5, Sept – 202.5)
The #’s were on the high side but have been bandied about for Several months and it could easily be argued that they are Already factored in!
- HARV PROGRESS – % Done – 28 (LW-22 Avg – 47)
Ill – 47 (Avg – 64) Ind – 36 (Avg – 46) Iowa- 13 (Avg – 41)
- SOUTH AMERICA – early pltg issues have helped to support the mkt
- TECHNICAL ACTION – while Nov Beans broke out upside, Dec Corn
Momentarily penetrated the low end of its range before rallying Back into Mid-range – on the coattails of Nov Bean’s surge
The 14.280 BB crop is the 3rd biggest ever but the # may not get any bigger as later yields aren’t as good as early ones –plus harvest delays might cause some yield loss!
Dec Wht is bound in a tight range (430-460) – just off contract lows! The contract lately has no friends – as bearish influences abound – big harvest pressure in corn beans, world ending stocks at a record level – again & a negative USDA Oct Crop Rep!
- For the 3rd consecutive year, we have record world stocks
- The USDA is corroborating same – reporting 17-18 carry-out at 268 MMT (Est – 262, Sept – 263)
- Sovecon has raised the Russian wht crop by 2.2% to 82.9 MMT
- Big crops in Eastern Europe, the Black Sea Region & India have helped
Global stocks at record levels Dec Wht needs a weather issue somewhere to rally!
Despite a record increase in 3rd -4th Qtr production, solid domestic & export demand has rallied Dec Cat $12 (107-119). Since Mid-Aug to a point where the mkt is at a $7-8 premium to cash – twice what it normally is! So, the mkt is currently overbought & focusing on an Oct COF Report this Friday – promising a placement # of 7% over 2016! So maybe a correction in the uptrend before the report!
Much like its sister mkt Dec Cat, Dec Hogs were able to launch a substantial rally – albeit in the face of mounting production – thanks to healthy domestic & export demand! The Dec Cat rally (107-119) started in Mid-Aug – while the Dec Hog rally (56-64) started in Mid-Sept!
!) 3rd-4th Qtr Production to be up 790 MP – 10 yr high & 2nd highest on rec
2) 4th Qtr production is to be up 5.8% over 2016
3) The improbable rally pushed Dec Hogs to a $5.45 premium to cash –
When normally it’s a $6.50 discount
The situation is ameliorated by the fact that 4th-1st Qtr Production is Expected to be less than
Questions? Ask Bill Moore today at 312-264-4337
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