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
Sterling exports have been doing battle with the harvest pressure of the US’s biggest ever bean crop (4.4 – 4.5 BB) – which has produced a sideways trade since mid-Aug – albeit with an upward bias! With the harvest almost ¾ done, the “old wives tale” says the lows are in! Exports will definitely outlast the harvest pressure!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 2.5 MMT (1.3-1.9) – Thur sales Were 1.284 MMT (1.0-1.8)
10/29 – 198,000 MT China
10/19 – 384,000 MT China
10/16 – 227,300 MT Unk
- UDA’S CURRENT PRODUCTION ESTIMATES – based on the 10-12 Crop Report
Prod- 4.431 BB (4.321-4.480)
Yield – 49.5 B/A (48.5 – 50.2)
- HARVEST PROGRESS – Beans are 70% in (LW-49, AVG – 73)
Ill – 77(73) Ind – 69(67) Iowa – 61(81)
- TECHNICAL BREAK-OUT OFF 10/12 USDA REPORT?
Nov Beans managed a $10.00 close on Fri 10/13 on the heels of the USDA’s 10/12 report – a promising sign until “harvest pressure” reared its ugly head The following week – forcing a 25 cent correction in Nov Beans! Still the Mkt is hovering in the upper end of its range (950 – 1000) since Labor Day
- RANGE-BOUND – since 9/1/17, various offsetting fundamentals have kept Nov Beans in a range (950-1000)- including harvest pressure, exports, South American planting weather & the US Dollar – however, the biggest “bear factor” – harvest pressure – is rapidly waning
With the crop almost 2/3 in, the Mid-Aug lows of $920 are in effect – HARVEST LOWS! The mkt has witnessed higher highs & higher lows since then!
Whereas Nov Beans have been locked in a range with an upward bias, Dec Corn is in a pure sideways pattern since 9/1 (345-360)! Exports support & harvest keeps a lid on! The last two trading days epitomizes the “ebb & flow” of the range. Last Fri, Dec Corn was “down & dirty” closing at 345 – its lowest of the season – then today, the mkt rebounded with a 6 ½ higher day – back into the middle of the range!
FACTORS IMPACTING THE MKT
- EXPORTS- Mon Inspections were 2.5 MMT (1.3-1.9) –Thur sales Were 1.284 MMT (1.0-1.8)
Oct 20 – 120,000 MT Spain
125,000 MT Unk
Oct 12 120,000 MT Mexico
- LATEST USDA ESTIMATES (10-12)
Prod – 14,280 BB (LY – 15,148)
Yield – 171.8 B/A (LY – 174.6)
- HARVEST PRESSURE – % IN 38 (lw – 28 avg -59)
Ill – 62 (74) Ind – 46 (59) Iowa 23 (55)
- SOUTH AMERICA – was too dry up North & too wet in the South – Delaying planting
- CHEAP ENOUGH? Yes, the 3rd biggest crop ever – but the mkt has been Trading on that for several months & the 10 year low price level may Have factored in the 14-14.2 BB estimates
Would you rather sell a 10-year low or buy it? Isn’t it always “darkest before the dawn”? Shouldn’t exports outlast the harvest pressure?
Much like its sister mkts, Nov Beans & Dec Corn, Dec Wht continues to labor in a sideways trading pattern since Labor Day (425-460). Dealing with not only record global stocks of its own, it is also taking on a record bean crop & the 3rd biggest corn crop ever! The mkt needs a bullish impetus such as strong exports & a weaker dollar!
After running up over $12 (107-119) since Mid-Aug, Dec Cat was certainly ripe for a healthy correction – especially considering its premium structure & the big production increases predicted for the 3rd-4th Qtr! So, when we received a bearish Cattle-on-Feed Report last Friday 10/13 – followed by a negative Cold Storage yesterday, we thought for sure the mkt was headed SOUTH! But alas, demand & strong cash mkt prevailed – the mkt eschewed the reports & today is only $.50 off its Oct highs!
Much like its sister mkt Dec Cat, Dec Hogs has experienced a sharp upturn since late Sept (56-65) as solid demand & a strong cash have propelled the mkt into a premium position as well as an overbought status. So, this contract, as well, was prime for a sharp correction & indeed we saw one off the two negative meat reports! The difference was the demand factor as Pork imports were down 38% from last year! But today Dec Hog recovered after a $2.50 correction off the top!
Questions? Ask Bill Moore today at 312-264-4337
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