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 powerful combination of trade jitters & excellent crop conditions has weighed heavy on the mkt for the past week forcing a 50 cent capitulation (1050-1000) & a weekly loss of 21 cents (1041-1920)! Even though trade talks with China have been ongoing of late, no concrete agreement has been reached & NAFTA isn’t faring much better!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 557,733 (579,245) & Thur sales were 1.045,000 (650 – 1.350)
25 May 312,000 China
25 May 165,000 China
4 June 114,300 Mexico
- CROP CONDITIONS – Beans are 87% in (avg – 75) & the first gd-exc rating was an impressive 75%
ILL – 94 (77) Ind – 94 (79) Iowa – 93 (81)
- TRADE CONCERNS – they say “talk is cheap” and the recent trade talks have certainly demonstrated that – much positive conversation with China (but no concrete deal) wasn’t enough for a skeptical mkt – and that coupled with steel & aluminum tariffs wreaked havoc on grain prices a GREAT START –to the planting & growing season – after a poor start – has emboldened the Bears – already calling for better than expected yields
- KEY USDA REPORTS THIS MONTH – will certainly shed some light on the current supply-and-demand –
- Tues – June 12 – June Monthly S & D
- Fri – June 29 – Planted Acreage & Qtly Stocks
- MACRO MKTS – the US Dollar continues its impressive upside run – 600 points in 3 weeks (89-95) – which does no favors to our exports – Crude Oil has rallied 16 dollars since early Feb – which is very supportive to ethanol demand it’s only early June – so way too early to make prognostications about the crop size – plus we had several very hot days in May – does that portend a weather pattern? Plus, we still believe the trade issues will be resolved! So strap in for what we believe will be “sideways-to-higher” trading pattern – going forward!
On May 29, July Corn issued a warning – reaching $4.10 but closing at $4.00! Then after a couple of consolidation days, July Corn continued its descent stretching all the way down to $3.80 before “Turnaround Tuesday”! The shocking plummet was the result of a “perfect storm” of trade fears & a perfect beginning to the growing season! However, we wouldn’t be too hasty in “writing an obit” for the Corn Mkt – being that it’s only early June, 2 million less acres are going in, exports are robust & there is absolutely no weather premium in the price structure!!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were a whopping 1,554,961 (1.1 – 1.6) & Thur sales were 1,142,400 (850 – 1.350)
29 May 231,248 Unk
- PLTG PROGRESS – after a very sluggish start, corn planting accelerated rapidly & now is 97% in (avg – 95) – gd-exc is at an impressive 78%
- Ill – 100 (avg – 97) Ind – 98 (94) Iowa – 99 (97)
- WHICH WAY ON TRADE? On one hand, we firmly believe Trump will not throw Agriculture under the bus TRADE-WISE – especially in an election year – but on the otherhand, sometimes his rhetoric points to the contrary–
- CRUDE OIL – is already up 40% this year – & this bodes well for ethanol demand July Corn is now closer to its lows – than it’s highs – would you rather buy it or sell it – with the entire growing season ahead of us?
July Wht fell victim to the price plummet of July Corn & Beans – losing 50 cents (555-505) in just 5 trading days! The double-fisted culprit – trade jitters & an excellent start to the growing season – were more than enough to stop the previous 70 cent (485-555) rally in its tracks. However, weather concerns in the world’s most important growing regions were enough to stabilize the mkt – including “dry issues” in Southern Russia, The Black Sea, The Ukraine, Australia & Canada. These coupled with our own drought concerns in the Winter Wheat areas could mean better demand – down the road!!
For over 2 months, June Cat has been locked in a tight range (102-108) – as the big discount to cash, record high packer margins & Spring Demand has been neutralized by a long-anticipated jump in beef production! And now add to that trade war jitters! But, of late, the positives are gaining traction – with the mkt pushing up against its upper limits! General trade sentiment is that June Cat’s still sizeable discount to cash has dialed in much of the bad news & that trade issues will ultimately be resolved!!
Questions? Ask Bill Moore today at 312-264-4337