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
Inexplicably, the US/China trade impasse – a situation that harms both parties – went back to square one! And the mkt felt the brunt of the fall-out – losing 30 cents 842-810 added to this disappointment were planting-delays that suggest a corn-to-bean switch & finally overhanging the mkt is record carry-out! However, the 10 year lows have dialed this in!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon inspections were 600,000 (400-600,000) & Thur inspections were 150,000 (50 – 450,000) Thur – 369,000 to unknown
- PLANTING PROGRESS – beans are 6% in (lw-3, 2018-14, avg – 14) Ill – 3 (avg – 16) Ind – 1(avg – 12) Iowa – 8 (avg-11)
- USDA SUPPLY & DEMAND REPORT – 5/10/19 The first new crop #’s were a little on the bearish side but the mkt handled them pretty well. Production – 4,187 stocks – 943 (786-1524) Global 113.0 (100-143)
- TRADE DEAL- just when we thought we had a deal, we didn’t! China backtracked on some major issues – Trump didn’t like it – and now we’re back at the starting point- but hope is still alive! The G-20 meets in June & both the US & China leaders will be there! And as long as they keep talking, there’s a chance a deal can be struck!
- BEANS AT LOWEST LEVEL SINCE 2008! We’re normally not ones to trade price but 10-year lows have made us sit up & take notice
When does the bad news get dialed in- it’s really hard to say – but to be sure we’ve had a plethora of negatives & there is absolutely no WEATHER PREMIUM in the price structure – so we wouldn’t push the short side!
The July Corn contract finally said “enough is enough” key-reversing this morning on the 8:30am “reopen” – rallying over 14 cents from its lows to close a nickel higher! Not only was the mkt oversold but it has lingering concerns about planting delays that would imply a corn-to-bean switch in acreage! And also the mkt decided that most of the “bad news” had already been released!!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 976,000 (700-1200) & Thur sales were 293,000 (550 -1,000)
- PLTG PROGRESS – corn is 23% in (lw-15, 2018-36, avg -46) Ill – 10(66) Ind – 3 (35) IA – 36(51)
- USDA – FRI – 5/10/19 Prod – 14,765 (14,220 – 15,010) 19-20 Stks- 2,142 (1,694 – 2,506) Global – 304 (271-329)
- THE PLTG WINDOW IS SHRINKING – a persistently cold & wet Spring is finally catching up to the corn mkt as we approach mid-May
As the bad news from the failed US/China trade talks becomes exhausted at the same time, mid-May planting delays started to get the mkt’s attention! These two conflicting fundamentals resulted in a key reversal-up by July Corn – leaving a spike low – and very likely a seasonal low!
July wht took its cue from July corn KEY-REVERSING on Mon! And that coupled with today’s action made it a plus-30 cent rally since 8:30am on Mon! Indeed, what a difference a day makes! Much like its “sister mkts” – corn & beans – wht prices had been bludgeoned by a stalled-out trade deal & a bearish USDA Report last Friday! So the severely oversold mkt rebounded sharply – in part energized by a glacial Spring Wht planting pace –currently at 45% (avg – 67) – released yesterday! The 420 low from Mon looks to be a seasonal low!
Too many cattle & disappointing trade talks have forced a $15 break (125-110) in June Cat – that has left the mkt woefully oversold! Spring barbecue demand & a possible resumption of US/China meetings have given the mkt a “glimmer of hope” – meaning this hard break could well be a buying opportunity!
June Hogs break from the April highs was less severe than of June Cat – indicative of a stronger fundamental mkt. That indeed is the case with ASF in China & the on-again- off-again trade war – both potentially implying a jump in US Pork exports! Add to that a strong seasonal period for pork values – and the current correction – much like the cattle – offers a strategic buying level!
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