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
In the past 6 trading days, Mar Beans have exploded for a 60 cent gain (low to high)
Making new contract highs along the way! The main catalyst has been Argentina weather –
Too dry & too hot – which has steadily ratcheted down the crop estimate of Argentine Beans.
This sudden upside move is all the more impressive – in light of very lackluster exports!
FACTORS IMPACTING THE MKT
1) EXPORTS – Tues Inspections were 960,000 MT (750-1.100) –Thur sales
Were 837,000 MT (450-750)
Feb 16 Bean Oil 28,000 S. Korea
Feb 12 Beans 198,000 Unk
Feb 5 116,000 Unk
Feb 2 Beans 108,860 Beans
2) USDA FEB 8 REPORT – this report was the first “tip off” that Beans
Were sold out & ripe for a turn-around- US Stockpiles come in at
530 MB (Est -492) but the mkt was able to slough off this unfriendly #
And close higher!
3) SOUTH AMERICA – for sure Argentina has been the culprit with dry conditions extending to as much as 50% of the growing area – Brazil on the other hand
Has received plenty of moisture – but the “net effect” is still projected to be
A 13-15 MMT deficit over 2017!
4) OUTSIDE MKTS – are on our side for a change – the US Dollar is on a 3 year low
Crude has rallied as much as 50 % since Mid-June – both good for export demand & suggesting a little inflation is creeping in!
5) LACKLUSTER EXPORTS – week after week, they’ve been below last years pace – but with the deterioration of the Argentine crop, they should improve
6) MEAL IS THE UPSIDE LEADER – this is always a good sign for any up-move
in the grain complex
The Bean mkt is getting a lot of traction out of a “little bit of good news in
Argentina” – it’s dry there but by no means is it a full-blown drought! This bodes well for the
Bean complex with La Nina lurking ahead of the all-important US planting & growing season!
The “800 pound gorilla in the room” is clearly the Argentine weather woes &
Its crop-reducing impact on the Argentine Bean Crop. March Beans & March Meal responded
In kind – both scoring new contract highs. And Mar Corn trailed along as the weak sister –
Gaining only 2 ½ cents! However, to its credit, it has gained 24 cents since Mid-Jan – due in
Large part to corn’s price as the cheapest on the world mkt – accounting for its very robust
Exports- week after week!
FACTORS IMPACTING THE MKT
- EXPORTS – Tues Inspections were 938,000 (800-1000) mt & Thur sales
Were a whopping 2.071 mmt ( 1.0 – 1.5)
Feb 16 116,000 mt Japan
Feb 14 123,000 mt Unk
Feb 6 120,000 mt Japan
Feb 6 105,000 mt Unk
Feb 5 130,000 mt S Korea
Feb 2 195,000 mt Unk
Feb 2 170,000 mt Egypt
- FEB 8 USDA REPORT – all estimates were lower than expected –
US & GLOBAL STOCKS and BRAZIL & ARG CROPS – reflecting great export
Demand & S/A weather issues
- US $ & CRUDE – of course a lower US Dollar is very beneficial to our exports –
Which has been validated every week – and a higher crude is good for ethanol
Demand & suggests inflation
- LA NINA – this is not a MYTH – its real – from the dryness in Argentina to the
Dryness in our Winter Wheat Belt – it doesn’t take a lot of imagination to
Appreciate its impact on our 10 year low prices – should it rear its
Ugly head during planting & growing season
They say “a rising tide floats all boats” & that was certainly the case this past
Week as Bean’s 40 cent rally lifted corn – but corn is no slouch with 10 year low prices
& solid exports!
Mar Wht has had an impressive 55 cent run since Mid-Jan (412 – 467) – but
Has recently showed signs of stalling out –especially after today’s actions – which had
REVERSAL written all over it! After coming within 4 cents of last week’s high, Mar Wht
Had a sweeping turn-around –breaking inter-day 13 cents & closing under last week’s lows!
The mkt has been feeding off
- Drought like conditions in Kansas & Oklahoma – the key WW states
- Strong rallies in Beans & corn
- A competitive price in the world mkt & a cheap $$ – leading to
Feb Cat is “between a rock and a hard place” with burgeoning supplies
Being offset by robust! It’s been a real head-scratcher – but maybe today’s action will
Add clarity – with the mkt currently down $2.40! The $13 run since early Jan (117-130)
Has been impressive
- 1st Qtr beef Production is expected to be 4.3% above last year –
2nd Qtr beef production is forecast up 12% over 2017
- The consumer confidence is at a multi-year high
- With big supply ahead, April Cattle seems unwilling to build a premium to cash
With Feb Hogs losing $1.50 last week (74.75 – 73.25), while Feb Cat
Gained almost $4.00, the hog mkt may be telling us – it has topped out – finally succumbing
To burdensome supplies! The surging stock mkt & the stiff discount of April Hogs to cash
Suggested more up – but it may not happen!
Questions? Ask Bill Moore today at 312-264-4337
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