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
May Beans surrendered 50% of their “POST TARIFF” rally (985-1063) as a very cold April has moderated – promising planting progress soon & resulting in the expected “seasonal pressure”. A strong dollar, a lack of 8am export business & continuing trade jitters also contributed to the down!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were a solid 1,040 MMT (500-800) – Mon Inspections Were 494, 907 MT (LW – 381,191)
- CROP RATINGS –
Pltg Progress – 2% (ly – 5, avg – 2)
Ill – 0 (1) Ind – 0 (1) Ia – 0 (0)
- ONGOING TRADE CONCERNS – were renewed by news that China would move ahead with tariffs on US sorghum imports
- SOUTH AMERICA – production is down 15-30% but the news is very old & undoubtedly dialed in!
- US DOLLAR – has had a sharp rise in the past 5 trading days – which has certainly been detrimental to US Exports
Move over SOUTH AMERICA! Step to the head of the class – US PLANTING! The all-important US planting & growing season is dead ahead and will be the dominant fundamental going forward – with secondary roles played by exports, the US Dollar & Trade war jitters! La Nina induced dryness- like we witnessed in South America & the US Great Plains would inject a huge bullish WILDCARD into the mix!!
May Corn has basically been range-bound since early March (370-394) – Round-tripping the upper & lower limits several times in the past 6 weeks! Solid exports & less acres have done battle with trade war jitters – keeping the mkt pretty well under wraps! However, should pltg delays extend past Mid-May, there could be some corn-to-beans switching!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were 1,203 MMT (700-1200) – Mon Inspections were 1,719,025 MMT (1,576,113)
- CROP RATINGS –
Pltg Progress – 5% (Ly – 15, Avg – 14)
Ill – 4 (20) Ind – 1 (5) Ia – 0 (11)
- WHEN ARE PLTG DELAYS REALLY PLTG DELAYS – this year’s planting season is definitely off to a slow start due to an unseasonably cold April! But until May 15, we don’t see major switching and most producers need only about a week and one-half window to plant – given modern technology & the formidable “work ethic” of the US Producer
- SOLID SUPPLY/DEMAND FUNDAMENTALS – although the mkt is feeling pltg
Pressure now, it’s hard to argue with the S/D – going forward
a) 2 million less acres
b) Corn-to-bean switch should pltg delays extend to Mid-May
c) Robust Exports
d) 10 year lows
e) Impressive staying power thru the tariff talk a little bit of “dry” will put a “4” in front of that corn price!
The vagaries of a “pure weather mkt” have been epitomized by the May Wht contract since Mar 1 – up to 520, down to 440, up to 495 & down to 460 – all off changing rain forecasts
- The crop ratings overall specifically in KS, Ok & Tx are still abysmal
- The upcoming Wheat Quality Tour should corroborate that
- Because US Wht is not competitive on the world mkt, exports
- Remain mediocre at best
- Spring Wht Pltg is 3% complete (2-avg)
Global carry-out remains high as we haven’t had the exports to whittle it down – like we have in corn
For the 2nd consecutive week, June Cat stayed in a tight range (101-106) as its sizeable discount to cash is being offset by large production – keeping the mkt sideways
- June cattle is a whopping $15 under the cash – when normally, it’s 5-6 – very supportive
- Beef production is supposed to jump 10.2 % in the 2nd Qtr – adding to supply woes
- The 4/20 Cattle-on-Feed came in neutral but, significantly, placements were 90.7% – the first time they’ve been well under 2017 in 4-6 mo
- Springtime barbeque demand will soon be kicking in there’s enough on both sides to keep June Cat range-bound
Just the opposite of June Cat, June Hogs are riding a prodigious $25 premium to cash (avg-$7.50). So one can argue much of the “Spring Demand Rally” is priced in. And with sluggish export demand, the premium might be too wide! This might help to explain yesterday’s “gap-lower” down-day – despite Jun Cattle’s $2.00 rally! The good news is simply already factored in!!Questions? Ask Bill Moore today at 312-264-4337