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
The proverbial perfect storm has descended upon the bean complex resulting in a $2.50 plummet since early March! Supply has potentially been bloated by the promise of another big crop – judging by excellent early crop conditions! And demand has been bludgeoned by a looming trade war with China! Yet it’s way too early to write an obit!!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were a mediocre 529,000 (400 – 1.00) –
Mon Inspections were a robust 818,396 (675,621)
13 June – 177,000 Unk
4 June – 114,300 Mexico
- CROP CONDITIONS – are so far excellent – gd/ex – 73% (74)
Ill – 77 (73) Ind – 74 (73) Iowa – 80 (78)
- TARIFFS – first it was 50 billion – then an additional 200 billion – the first date to implement would be July 6 – neither the US or China wants this – is there a better way?
- US DOLLAR – lost in all the angst over the trade war rhetoric & the great-looking crop – so far – has been the rapid ascent of the US Dollar. Since Mid-April, the Sept Dollar has rallied almost 700 points – making an already severely stressed export program even more so in our opinion, it’s too early to bury this mkt – first, the crop is not made until August – second, the mkt has already dialed in a lot of bearishness – third, there’s still a chance there could be a resolution – it is an election year & the farmer helped get Trump in!
Along with Beans, Corn has also experienced a precipitous slide – losing over 70 cents in just Under a month’s time! However, corn’s fundamentals are superior to beans – 2 million less acres going in & much better exports – so the detrimental impact of a trade war & excellent crop conditions would be less on corn than beans! So any inevitable recoveries will be sharper!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were 505,000 (850 – 1.4) –
Mon inspections were – 1,668,835 (1,410,564)
12 June 152,000 Mexico
22 June 131,300 Mexico
22 June 117,000 Panana
- CROP CONDITION – Corns gd/ex 78% (77) – Emerged 98 (97)
Ill – 75 (76) Iowa – 74 (71) Ind – 76 (75)
- TRADE JITTERS – political rhetoric has been harsh & the chart damage substantial but somehow, we see a resolution considering 2018 is an Election year & also that the US Farmer was one of Trump’s staunchest supporters in 2016
- HEAT COMING – much warmer temps expected next W/E with July Corn Futures totally void of any weather premium we feel the mkt has already dialed in some very bearish news (trade war & big crop) when it’s too early to tell if either or both will occur? Look for set-backs to implement inexpensive calls!
The two-headed villain that is trade wars & big crops nailed the July Wht contract to the tune of 70 cents (535-465) – but this week, wht has staged a 30 cent recovery (465-495) – on the back of drought issues around the globe including Russia, other Black Sea areas, Australia & Canada! However, sustained rallies from here will Need help from Corn & Beans!!
The cattle mkt has not been as sensitive to the potential trade tariffs as the grains & pork have – yet still, we fell last Tues due to Trumps announcement of an additional 200 billion in tariffs. But, we feel, that “spike low” – much like what happened on the corn & bean charts, will hold & solid seasonal demand plus Aug Cat’s discount to cash will support fro here. Also, the Cattle-on-Feed at 2pm is predicted to placements down 4% from last year!
Bill MooreQuestions? Ask Bill Moore today at 312-264-4337