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
Today is PEARL HARBOR DAY! We must never forget!! A week ago, no one knew what to expect out of the US/China summit at the G-20 in Argentina! What surfaced was not an agreement but a 90-day truce between the Super-powers – laying the framework for further talks. Out of that came a 17 cent weekly gain – all things considered – we’ll take it!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,041 (500 – 1,250) & Fri Sales were 894,000 (600-900) 3 Dec 147,500 MT – Unk
- USDA DEC REPORT – will be issued on Tues 12/11 at 11am – but only Supply/demand numbers – final production #’s will come out in January and will undoubtedly be under the Nov #’s (4,600 52.1) due to early wintry weather taking its toll on the still-unharvested crop
- OPEC CUTS PRODUCTION 1.2 BILLION BARRELLS – desperately needed good news for the crude oil mkt after it suffered a 35% free fall in Oct/Nov-Also positive news for ethanol demand
- A VOLATILE NERVOUS STOCK MKT – had a couple 800 point down swings followed by a 700 point rally – when all the smoke cleared, the mkt lost about 1000 points for the week – concerns about tech stocks, rising interest rates & the validity of any US/China deal weighed on the mkt
- WILL A TRUCE LEAD TO A DEAL? This was the “burning question” this week as the mkt searched for any details/specifics and actual export shipments! But the mkt – despite all the up-and-down rhetoric – was able to hold on to its gains established last Sunday night on the opening.
We feel Trump needs this deal –to shore up the faltering stock mkt! Plus, tariffs aren’t helping the US or China! We see it eventually getting done!!
Even though the US/China talks at the G-20 mostly concerned a resumption of normal bean exports, the Mar Corn contract turned in the best performance in the grain complex – at least technically – as Mar Corn had a “GAP & GO” last Sunday nite! Subsequent corrections – late week – were unable to fill this gap! This is a very powerful technical formation – & the longer the gap goes unfilled, the stronger it becomes!!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,035 ,000 (700-1,200) & Fri sales were 1.180,000 (800 – 1.100) 6 Dec – 198, 120 MT – Mexico
- OUTSIDE MKTS – a little help & a little hurt but Mar Corn still was able to grind out a 7 cent weekly gain – the DJI lost 1000 points but Crude oil rallied sharply off the OPEC Production Cut
- USDA DEC REPORT – only S & D #’s – so we only have the Nov #’s ( 14,626 178.9) to go on – however, the Jan report will probably come in lower – as the final 10-15% of harvest is notoriously the worst
- US CORN IS THE CHEAPEST ON THE WORLD MKT –which explains the robust exports we’ve had all fall – a trade deal should only enhance that scenario
- PRICE COUNTS WHEN IT’S 10-YEAR LOW! Normally, commodity truisms say not to buy something strictly based on price – after-all, what price is too low or too high! But when you’re talking about historic levels –this trading logic should be re-evaluated.
- 2019 PLANTING COULD FAVOR BEANS – with better exports expected. Next year, bean acreage might go up – at the expense of corn!
Corn Bulls are saying – IT’S ABOUT TIME! With strong supply/demand fundamentals, it’s been an enigma to many why corn hasn’t performed better! It would be quite positive for the mkt if OPEC’s production cutting move this week has indeed “cratered” the Crude Oil Mkt!
Mar Wht buffeted about for 4 days in a sideways pattern with two up days followed by two down days – as Egypt issued another tender – but this time excluding the US and Russia continued to export relentlessly – at prices below US Wht! But alas, the Friday export Sales were a whopping 711,000 MT (300-600) – 89% over last week & 58% over last month’s average. That’s all the Bulls needed as they parlayed that very encouraging export # Into a 16 cent daily gain & Mar Wht’s highest close since late Oct! Optimism abounded that better days were finally at hand for the much-maligned US Wht Exports!
Feb Cat languished for most of the week – but with an upward bias – & so it was able to squeeze a $1.00 gain out of only two up days! Demand uncertainties, a record short-term supply of pork and poultry & Feb Cat’s premium to cash have curbed recent rallies –but the export optimism attached to the potential US/China deal overcame. The negatives this week – for a solid weekly gain!!
Speaking of sideways action, Feb Hogs epitomized that this week – finishing the week around 67.80 – exactly where it started on Monday! However, the good news is that this level is only $1.00 off its 6-month highs! There seems to be a clash between short-term bearishness – big meat & poultry supplies & a healthy premium to cash – and longer-term bullishness – promising export potential off a US/China resolution & from massive losses exacted from the China hog population by The Asian Swine Fever!!
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