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
Who saw that coming? Nobody did – as the Bean acres – 88.982MA – came in under the low end of estimates (89.90 – 92.60)! That was the biggest SURPRISE! But another one was the market’s ability to close up 26 cents even though QTLY BEAN STOCKS came in at a record 2.107BB! Obviously, the market is putting more credence in acreage & exports!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 542,434 (300 – 700) – Thur sales
Were 386,000 (600 – 900)
3/29 266,500 Unk
3/26 132,000 Unk
3/26 120,000(meal) Spain
- PROSPECTIVE PLTG & QTLY STOCKS – 3/29/18 – this report was a “bullish
Shocker” coming in over 2 million acres under the estimates – especially considering pre-report sentiment was definitely bearish – the reasons were two-fold – first the farm economy is very weak – leading to less acres & second many Bean acres are going to wheat
Bean Acres – 88.982 LY-90.167 EST-91.056 RANGE (89.90-92.60)
Bean Stocks 2.107 2.030 (1.81-2.11)
- SOUTH AMERICA – Arg & Brazil Corn & Arg Beans are all estimated at
20-25% under last year due to their severe drought
- US SPRING PLANTING – Well, it’s very early April but unseasonably cold –
Should this pattern continue, it certainly could adversely impact acres planted!
But we must remember that modern technology & the producer “work ethic”
Means a lot of acres can be planted in a short period of time! US acres are down, SA production is down, exports are solid & Spg Pltg could be delayed! As well, “trade war jitters” haven’t seemed to hurt the rally. The mkt seems to be leaning up! (Sorry – this report was written last night BEFORE the fireworks).
The USDA 3-29 Corn Acreage # (88.02) was bullish at 1.3 MA under the estimate & a full 2 MA under last year (90.1 MA) – but the Bean # was more of a “BULLISH SHOCKER”! Still, coming in, the corn presented a better “export scenario” so that coupled with the lower acreage pushed May Corn up to its March Highs!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,330,000 MMT (1.0-1.4) –
Thur sales were 1.63 MMT (1.2 – 1.5)
2/21 138,000 S Korea
2/20 110,000 Peru
2/19 115,000 Unk
2/19 206,000 Japan
- USDA 3/29/18 REPORT – with the farm economy down, we guess it
Shouldn’t be a surprise – that corn acres are down – the mkt might buy
Some acres back – should May Corn rally enough
Corn Acres 88.02 LY-90.16 Avg-89.34 Range- (88.4-91.0)
Corn Stocks 8,888 8.022 8716 (8.50-8.88)
- WAY TOO COLD TO PLANT – obviously, winter is hanging on in certain
Areas of the corn/bean belt –while it’s only April 2, one wonders if this early cold snap is the beginning of some untoward weather for our planting period.
Corn came into the USDA Report with Bullish Fundamentals & the #’s issued by the gov’t did nothing to dissuade traders otherwise! In fact, adding 2 million less acres onto 10 year low prices, stellar exports & a shaky weather start to the pltg season – Certainly enhanced the Bull’s stance!
After May Wht’s precipitous 70 cent decline in Mar (520-450), it consolidated for 2 weeks (445 – 465) in front of the Mar 29 USDA Report and conflicting fundamental events have kept it there since!
- The USDA reported Spring Wheat acres (12.637 MA) were up 1 MA from the
Estimate & 1.5 MA from 2017!
- However, the very bullish reduction in corn & bean acres offset this
- Continuing “TRADE WAR JITTERS” have negatively impacted already
- This year’s first crop ratings revealed still abysmal crop ratings with overall g/ex at 32% (avg -51) – the 2nd worst in 20 years – the key states are worse KS – 10 OK – 9 TX – 15
Since Mid-Feb, June Cat has lost $20 (119-99) as production has continued to outstrip demand. The last 2-3 Cattle-on-Feed Reports have all reflected higher placements & quarter-to-quarter beef production has increased over 2017. Adding insult to injury, the 3-29 USDA Report unexpectedly lowered corn & bean acreage from 2017 – which implies higher feed costs & may force liquidation of feeders! Finally, trade war fears have crimped exports! However, the severely oversold mkt may be cheap enough now to attract severely needed demand!
June Hogs has no friends out there – as the contract has shed $15 since early January (86-71)
- Heavy Slaughter have led to lower cash – almost daily
- The cattle mkts slump has fueled “Hog’s Down”
- Higher feed costs suggested by the USDA REPORT could prompt liquidation of some hog operations
- The latest 25% tariff on US Pork by China is the latest negative – even though exports were trending lower before that the China tariff on US Pork may be the last piece of Bearish news that finally puts an “exhaustion low” in June Hogs.
Questions? Ask Bill Moore today at 312-264-4337
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