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
After $1.00 rally in only 3 weeks time off a historically slow planting pace, the Mkt got ahead of itself and has corrected about 40% (895-850). Feeding the correction were Concerns about the Mexican tariffs (since resolved) & the expected acreage switch from corn To beans. Hope still exists for a US/China accord as both are attending the G-20 later in June.
FACTORS IMPACTING THE MKT
- EXPORTS – Today’s Mon Inspections were 850,000 (500-900) & Thur’s sales were a disappointing 583,000 (200-500)
- HARVEST PROGRESS – Beans are 60% in (lw-39 avg -88) 34% emerged (avg Ill – 49(91) Ind – 42(89) Iowa – 70(95) ) Ohio – 32(89)
- JUNE USDA SUPPLY & DEMAND – 6/11/19 Production – 4.092 (ly-4544) Yield 48.7 (ly – 51.6)
- MEXICAN TARIFFS – President Trump claims to have forged a deal with Mexico – eliminating the need for any tariffs
- US/CHINA – Will have an opportunity to restart talks at the G-20 in Japan Later this month
Beans are off to a rough start – & a down production year could go a long way in reducing its record carry-over!!
Much like July Beans, July Corn, after a meteoric $1.00 upsurge -which left three upside gaps in its wake – became overbought, dialed in a lot of the planting delays & had to deal with Mexican tariffs – all at once!! The result was a 30 cent correction – allowing the mkt to consolidate & digest the news of the slowest planting pace ever! The trade front became a little brighter as a US/Mexico deal was forged & US/China talks may resume at The G-20 meeting in Japan! Meanwhile, despite the sharp rally, corn is still relatively cheap with an entire growing season ahead of it – early production estimates are down 1-2 BB!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon inspections were 850,000 (500-900) & Thur sales were 14 (500-800)
- HARVEST PROGRESS – Corn is 83% in (lw-67, avg-99) 62% emerged (avg-93) Ill- 73 (100) Ind – 67 (98) Iowa – 93 (100) Ohio -50 (96) The initial crop rating (good/excellent) was 59% – the 2nd lowest in history for the first rating
- JUNE 11 USDA CROP REPORT – Production – 13,903 (ly- 14,420) Yield 170.3 (ly-176)
- TRADE ISSUES -Mexican tariffs are gone & US/China talks may resume soon – as THE DONALD may have finally realized that no one wins a trade war!
As the mkt consolidates after its vertical $1.00 3-wk move, admittedly the mkt action hasn’t been too spiffy – certainly not befitting its bullish fundamentals! And of course THE MKT IS ALWAYS RIGHT! But we feel it’s way too early to write an obit on the corn mkt – given all the acres lost, the yield drag and the relatively low price – historically! And especially with the entire growing season to go!!
July Wht is certainly effected by a plethora of factors including global factors such as Russian & Canadian crop issues, the historical planting delays this Spring & the condition of the Winter wheat crop as it comes out of dormancy. But today’s surge can be directly attributed to today’s USDA June Supply & Demand Report that knocked 1.4 BB off the total corn production & 10 bu/a off the corn yield – as a rising tide floats all boats!!
There’s an old commodity axiom – IT LOOKED SO BAD IT WAS GOOD! And I think this was the case with Aug Cat the last two weeks! After nearly a $20 break & reaching a severe discount to cash, the mkt came face-to-face with Spring barbecue demand – the best “D” of the year – and with the weather finally cooperating, Aug Cat have finally turned the corner -posting a “spike low” on 5/31/19 & gathering upside momentum since then with a $4.50 rally!
What’s wrong with this picture? Trump reaches a deal with Mexico – eliminating the tariff possibility & Aug Cat rallies $4.50 – but July Hogs can’t move off the dime! And that’s not even mentioning the advent of the barbecue season – as brauts & pork chops start appearing on grills around the country! The culprit may well be heavy hog weights still adding to the short-term supply! But the lows have to be close at hand!!
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