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 little GOOD COP/BAD COP sent bean prices on a roller-coaster ride this past week but when all the smoke cleared, Mar Beans were able to eke out a 7 cent gain! With the void of USDA data due to the gov’t shutdown, the mkt is starved for any info – rumors included! So the first trade rhetoric was negative – then very positive & the mkt reacted!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon inspections were 673,172 (625-950) – the mkt acted this week like China is buying more but that couldn’t be verified due to the gov’t shutdown
- FLYING BLIND – with no info out of the USDA, the mkt action has retracted to a trading range – with a lot of guessing & speculation as to export activity – to be sure, the mkt is very hungry for any info, rumor or innuendo – as evidenced by Friday’s action – which saw both crude & grains erupt off some positive trade rhetoric
- BAD COP/GOOD COP! Which way is it – are trade talks going well or not? First Trade Rep Lighthizer says the 2nd round talks in Bejing weren’t substantive enough & then Treasury Secretary Mnuchin proposes lifting tariffs & further says China is interested in a long-term 6 year deal! The mkt fortunately glommed onto the last sentiment
- SOUTH AMERICA – Still the same until the end of Jan – too dry in Brazil & too wet in Argentina
- CRUDE OIL -rallied sharply on Friday – starting around 9am – responding to positive Chinese trade rumors – The mkt is now $10 off its lows after a $33 plummet (76-43) since early October – very good news for domestic biodiesel & ethanol demand
We’re in uncharted waters – dealing both with the longest gov’t shutdown ever & a possible resolution to the US/China trade issue!! But the “ebb & flow” of the mkt action suggests progress is being made – as Mar Beans closed today so far up 20 cents for the month!!
The mkt action speaks volumes this week – dropping to 6-week lows on Tuesday off “negative trade rhetoric” but recovering back up a dime by week’s end – off suddenly “positive trade rhetoric”! Corn has several “arrows in its quiver” – the best being that US Corn is the cheapest anywhere in the world – and secondly, that its US & global stocks aren’t nearly as burdensome as beans – finally that acreage could well favor beans over corn following a successful trade resolution! And don’t forget the 10 year low price level!
Two factors move the wht these days – one is ever-present rumors that Russia will abandon its relentless export pace – thereby throwing business the US’s way & second are “spillover rallies” in its sister mkts – corn & beans! This past week, the latter kicked in as a 30 cent rally in beans & a 10 cent rally in corn (from the week’s lows) – kicked in – jumping Mar wht from a 10 cent loser to basically unchanged for the week! Also, much like Corn, wht worldwide is very attractively priced!
Two fundamentals have driven Feb Cat’s $11 rally (117-128) since mid-Nov – incredible demand for beef & the onslaught of winter storms! The mkt peaked out this week at 128 – officially in an overbought mode! But the correction (128-126.50) was somewhat muted this past week – as a second major winter storm plowed thru the mid-west -promising possible death loss & lower weight gain! So the correction stalled out at $1.50 as the mkt assesses the damage done to cattle herds done this week-end. Stay tuned!!
The Feb Hog contract continues to be caught between bearish short-term bearish fundamentals – burdensome supplies- & bullish longer-term factors including improved exports off the US/China trade resolution & the Asian Swine Fever! In the meantime, the mkt became over-sold after a downward plunge – so it corrected that condition this week with a $3.00 rally (59-62)!
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