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
This was indeed a strange week! First of all, we’re dealing with the “always thin” holiday mkts – where mkt moves are exaggerated due to light volume! Second. We’re “flying blind” due to no export sales announcements in the wake of the gov’t shutdown! But despite that, with positive trade rhetoric & first-ever rice sales to China, we eked out a steady close!
FACTORS IMPACTING THE MKT
- EXPORTS – Wed Inspections were 651,000 (800-1200) – no wkly sales or daily 8am sales #’s this week due to the gov’t shutdown
- JAN USDA FINAL #’S – 1/11/19 – we hope! Assuming the USDA is up & running again! Most definitely, lower numbers than we saw in the Nov Report –which were 52.1 & 4600!
- TRADE RUMORS & FACTS – especially this time of the year, the mkt is looking for any “headline news” to digest – and today it got it! First, a second meeting between the US & China is scheduled for Jan 7 & second, China purchased rice from us for the first-time ever – a harbinger of better days ahead!
- SOUTH AMERICAN WEATHER – is still dicey – possibly taking the top-end off the record bean harvest forecast for Brazil!
- MACRO MKTS – we like roller-coasters but normally don’t ride them in Dec – but last week, it felt like one in the DJI – with the mkt rallying over 1000 points on Wed – then coming back from a 500 point deficit Thur – with the mkt finally finishing the week with a 500 point gain! Also, crude oil was able to “stop the bleeding” – concluding the wk unchanged – after dropping $33 from its highs in early Oct!
- BUY THE RUMOR – SELL THE FACT – since the G-20 Summit on 12/1, the mkt has shed $.50 (high to low) – being disappointed in the actual amount of export sales announced – you just never know how much good news is built into a mkt rally! With one day left in the trading year, we’ve experienced much volatility in Jan beans – with several 50-60 cent swings – both up & down – since Oct 1. The good news is that a US/China Trade Deal looks to be happening in the near future!!
With holiday mkts in full flight and the attendant “mkt slowness” exacerbated by the partial gov’t shutdown, it was definitely a non-descript week – with the major news covered in the afore-mentioned Bean comments! But day-to-day news indicates that a trade resolution could be close at hand – with the promise of extensive Chinese corn buying in our future – and “why not” – as US Corn is far & away the cheapest on the world mkt! Let’s face it – 10 year lows & robust exports are very compatible!
Mar Wht stabilized this week – after getting pummeled last week due to Russia’s announcement that they WOULD NOT cut back their relentless export pace! This despite their report of a 72 MMT crop –well down from last year’s record 85 MMT! So the mkt needed help from the beans/corn or the outside mkts – to rally –but none was forthcoming from these two! Especially with minimal export reporting from the USDA! So Mar wht – much like its sister mkt Mar corn – dawdled in a tight range – losing just a few cents for the week!
Who needs regular mkt conditions & USDA Reporting – to thrive – definitely not Feb cat! They clearly outshone all other mkts this past week – scoring new contract highs and a weekly gain of $1.50 (122.75-124.25)! While the stock mkt, the grains, hogs & energies buffeted about, This mkt fed off of stellar consumer demand & nasty winter storms out west to make new highs & close there!
Unlike its “sister mkt” Feb cat, Feb hogs have been unable to snap out of its extended downtrend –which has reached $9.00 (69-60) since Dec 1! Despite longer term support from the ASIAN SWINE VIRUS & a possible trade resolution, this contract as been unable to escape the short-term bearishness of the “largest supply period of the year”- succumbing to these massive supplies! However, the recent Cold Storage & Pig Crop Reports have been positive – suggesting the mkt soon will be able to carve out a low!!
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