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
Lack of solid exports in the wake of “no trade deal yet” & a perceived Corn-to-beans acreage shift combined to pressure July Beans last week to the tune of a
27 cent down week! Exacerbating the “down” was a very strong dollar that discourages exports! However, the mkt is getting very cheap & has no weather premium in its price so…
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 382,298 (lw-476,224) & Thur Inspections were 619,000 (300-700)
- A COLD, WET SPRING – has finally come home to roost as July Corn was only down 4-5 cents while the beans were down 5 times that amount –as planting delays threatened to creep into Mid-May – which of course is far more significant to the mkt than Mid-April!
- CROP RATINGS – beans are 1% in (2018-2%, avg – 2%)
- US DOLLAR – scored new highs-for-the-move last week – further slowing an already slow export pace
- US/CHINA TRADE DEAL is indeed a never- ending saga with many fits & starts nonetheless, it will get done because both countries need it economically & Trump needs it politically – parties are meeting in Bejing this week & Washington DC next week!
- RECORD US & GLOBAL ENDING STOCKS – are acting like an anchor – discouraging or topping out any rallies – however, these onerous stocks
The bean complex is clearly in a downtrend but is cheap enough where going after the short side is a “risky proposition”! Firstly, the July contract is sitting on 8-month lows – which also happen to be 10 year lows! So pushing the short side may be a hazardous undertaking with some bullish probabilities – waiting in the wings! Namely an imminent resolution of the US/China trade deal & ULTIMATE pltg delays – where it becomes too late & wet to plant anything!
From early April on, bullish traders were frustrated by the inability of the mkt to respond to the extreme cold & wet Spring we’ve experienced – in terms of anticipated corn-to-beans shift! Finally, the mkt – late last week – started paying attention to the inclement climes – as July Corn still closed lower but some 9 cents off its lows! Also, a resumption of face-to-face trade talks between the US & China tomorrow was supportive! A trade deal could be more beneficial for corn & ethanol than soybeans – according to export #’s being bandied about in the past few week!
July Wht labored all week under the burden of hefty stocks, a surging US Dollar & Excellent crop conditions! And at one time was down 14 on the week! But corn came to the rescue with a powerful rally last Friday – that spilled over into the wht lifting it to only a 6 cents lower close!
June Cat was ambushed by three main factors: a bearish Cattle-on-Feed Report, a record net long held by funds & good weather for weight gains! The net result was a stunning $7.50 plummet this past week – as the mkt gave back nearly ½ its gains from its May lows from last year! This may be about the extent of the correction – as a trade deal & ASF are still lurking as very positive export potential!
June Hogs basically coat-tailed June Cat down last week as the mkt dropped $8.00 (97-89) in just a few days – a victim of an extreme overbought condition and two negative meat reports – the April Cattle-On-Feed & Cold Storage! With the Asian Swine Fever still very prevalent in China & a trade deal on the verge of being worked out, we’d view this break as a buying opportunity!!
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