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
The slowest-ever planting pace have sent the grain complex VERTICAL! Led by corn off ideas that corn acres will go to beans & that there will be a significant yield drag on late-planted crops, July corn has rallied nearly $1.00 in 3 weeks! But lately, July beans have been no slouch – rallying off doubts that getting all the beans planted may be a stretch as well!
FACTORS IMPACTING THE MKT
- EXPORTS – Tues inspections were 532,000 (450-650) & Fri sales were 477,000 (250-450) – with the exports moved up a day due to the holiday-shortened week
- PLANTING PROGRESS – was a woefully low 29% (lw-19, avg-66) easily the slowest pace in history!
- Ill- 14 (avg-70) Ind – 11(avg-63) Iowa- 32(avg-77) Ohio-11(avg-55) Note that the Eastern Corn Belt is especially slow!
- TRADE DEALS – Tariff-happy Donald Trump is at it again – today threatening to slap tariffs on Mexico over their immigration policies – and that on the heels of the failed US/China trade talks – REALLY DONALD???
- THE WETTEST MAY ON RECORD -and June isn’t starting out much better – the crops always get planted but how many less acres & how much yield reduction?
- STILL CHEAP – despite explosive, near vertical rallies since Mid-May, grain prices are still relatively cheap – as they were all coming off 10 year lows
- TECHNICAL STRENGTH – needless to say, the charts look very bullish! Almost straight up with several “upside gaps” left along the way!
Just 6-7 years ago, we had $17-18 beans – so July beans close today at 878 – Even after rallying $1.00 – is only half that record level! So despite record stocks & major trade issues, the worm has turned! The crop is off to a very bad start – with an entire growing season ahead of it!!
On May 13, the mkt staged a classic one-day 180 degree reversal, putting in a spike low off failed US/China talks – yet rallying off delayed planting concerns! The upside follow-thru was dramatic as the mkt subsequently rallied $1.00 (340-440) in just 3 weeks time – leaving three upside gaps along the way! Coming into the planting season, corn already had relatively tight carry-over -and now there’s real concern as to how much these stocks will be reduced off a much lower crop than expected! Some pundits are suggesting reduced acreage & yield drag could translate into a crop 2 billion bushels under expectations!
FACTORS IMPACTING THE MKT
- EXPORTS- Tues Inspections were 1,098 (600-1,000) & Fri sales were 883,000 (350-650)
- PLTG PROGRESS – was at a critically low 58% (lw-49, avg-90) Ill -35 (95) Ind – 22(85) Iowa – 76 (96) Ohio -22(78) Of course, this is a much more dire situation than beans as the corn planting & PREVENT window is rapidly closing!
- FIRST CHINA – NOW MEXICO! Today, the President announced possible tariffs on Mexico if they don’t adjust their immigration policies – and the mkt corrected in response to this – in addition to month-end profit-taking
- $8.00 CORN IN 2012 -well, that seems like “light years” ago but it serves to remind producers & traders alike, that despite a $1.00 rally in just 3 weeks time we’re still historically cheap!
It’s easy to make a legitimate case for $5.00 corn this year- we’re off to a horrible start with an entire growing season in front of us! There could easily be more weather issues down the road! And what if trade differences are resolved!
THE PRODUCER CAN PURCHASE AT-THE-MONEY CALLS FOR 15-16 CENTS- WITH LIMITED RISK & UNLIMITED UPSIDE! PLEASE CALL IF THIS MAKES SENSE TO YOU!
Much like its sister mkts, July wht has rallied $1.00 (420-520) in just a mere 3 weeks. Its biggest upside impetus, indeed, is spillover from corn & beans – as well as planting delays of its own – plus winter wheat crop conditions deteriorating! And of course, there’s the historically cheap price level – as all three commodities – corn, beans & wheat are just coming off 10 year lows!
You’d think that Spring Barbeque Demand would have rescued June cat by now – especially after a solid $15 break (125-115) but indeed the mkt has been sabotaged by a cold wet spring which has blunted the “cook-out demand”! And also, the sharply rising corn & meal mkts have pressured feeders! The recent Cattle-on-Feed Report really revealed the cattle mkt’s reluctance to rally right now – as very bullish placement #’s weren’t enough to stop June cattle from breaking to new lows!
Equally disappointing in the livestock complex are June hogs – that after a $15 break, have been unable to gain any traction – even plummeting to new lows on Friday! Several factors can be blamed – the recent Trump announcement of Mexican tariffs, the lack of Chinese pork imports off the ASF epidemic & rising feed costs from meal & corn!
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