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
A plethora of cross-currents have buffeted the grain complex in the past week – not the least of which were TRADE WAR JITTERS! Added to these were rain forecasts for Argentina, US Plains & fears of a bearish USDA Report 3/29/18 The net result was a 22 cent down – but the mkt did hold ½ way-back of its 2018 rally!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 584,612 MMT (459,987) – Thur sales
Were 899,000 (700-1400)
3/26 132,000 Beans Unk
120,000 Meal Spain
3/16 20,000 Oil Unk
3/9 183,000 Beans China
3/6 120,000 China
- TRADE WAR? – sabers are rattling between US & China and the mkts
Have reacted accordingly – but will anything come of it – we doubt it! We need China – China needs us – and Trump is first & foremost a businessman – who doesn’t want to damage US/China trade – so we see a status quo soon resuming
- SOUTH AMERICA – a significant drought has damaged their corn & bean crops
In some cases reducing crop sizes by 15-30%
BRAZIL CORN 85.5 (ly – 98.5)
ARG CORN 31.0 (ly – 41.0)
ARG BEANS 39.5 (ly – 57.8)
- USDA ACREAGE & STOCKS – 3/29/18
CORN ACRES 89.5 ma (ly – 90.2)
BEAN ACRES 91.0 ma (ly – 90.1)
CORN QTLY STKS 8.711 (Mar – 8.622)
BEAN 2.030 (Mar – 1739)
WHT 1.493 (Mar – 1659)
- US DOLLAR – has dropped 150 points since Mar 1 – which has helped our exports we’re impressed with Bean’s action last week – only correcting 50% with ominous rumors of a trade war over-hanging the mkt! Further, with LA NINA impacting Argentina & the US Plains, who’s to say it won’t creep into the Corn Belt – Just at the wrong time!
May Corn was victimized by the two-headed monster – known as rain & trade war jitters – but after all the smoke cleared, the contract only lost 5 cents. Rain in Argentina pressured May Beans & rain in The Plains pressured May Wht – and together they leaned on corn! However, exports remain stellar!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,153,963 MMT (1,439,155) – Thur sales
Were 1.61MMT (1.5 – 2.4)
3/21 138,000 S. Korea
3/20 110,000 Peru
3/19 115,000 Unk
3/19 206,000 Japan
- TRADE WAR – the mkt has partially dialed in a trade war that we feel will never happen
- THUR USDA ACRES & QTLY STOCKS – the trade is eagerly awaiting these #’s – expecting ½ million less acres of corn & 1 million more of beans – however, the mkt will quickly revert back to weather – more US planting weather than the Argentine drought May Corn retraced 50% of its 2018 up-move off the afore-mentioned factors and awaits the all-important USDA #’S to fuel its next move. But with sterling exports, lower US acreage & S/A crop issues, the uptrend is still intact!
The Lord giveth & the Lord taketh away – and that’s how a “weather mkt” rolls! So, since Mar 1, May Wht has surrendered 70 cents (520-450) – mostly off “RAIN IN THE PLAINS”!
- Despite the recent moisture, G/EX ratings are still abysmal
KS – 13(11) OK – 9(5) TX – 12(10)
- Russia has exported more wht than anyone else in the past 25 years –
And still their inventories increased 11 MMT
- Despite the rains in the plains, WW has taken a hit that can’t be quantified
Until it comes out of dormancy
- Last wk, May KC Wht went limit-down
- Cumulative export sales are at 89% – only 3% below the avg USDA target
In a little over a month, Apl Cat has plummeted $13 (128-115) – on the back of rising production – reflected by the past 3-4 cattle-on-feed reports with high placements & quarterly increases in total beef supply. You’d think that solid demand would be generated at these cheaper levels – especially as we come into Spring Barbeque Season! The mkt will tell us!
April Hogs have followed cattle’s lead – losing $19 (77-58) since early January! and just in the past week, the mkt was in free fall (65.50- 58.50) – dropping $7! This is a decidedly bearish mkt – where production has overwhelmed demand – but at the same time is extremely oversold!
- The Pig Crop tomorrow at 2pm may reflect the bad news is already dialed in
- China tariffs have fueled the downside
- East Coast weather has not been conducive to demand
- April Hogs discount to cash has mitigated this down
- Big 2nd Qtr supply news has weighed on the mkt
- Spring Barbeque “D” could be a savior!
Questions? Ask Bill Moore today at 312-264-4337
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