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
Concerns about the corn-to-bean switch & a negative June 11 USDA Report have morphed into concerns about “flat-out” getting the bean crop in as the planting window shrinks from day-to-day! The net result is a mkt that – despite record stocks – has authored a $1.30 upside move – leaving two gaps along the way -feeding off historic planting delays!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur sales were 530,000 (300-800) & Mon inspections were 675,302 (734,074)
- PLANTING PROGRESS – Beans are 77% IN (lw-60 avg-93) & 55% emerged (84) Ill – 70 (95) Ind – 64 (94) Iowa – 89 (98)
- JUNE 11 USDA REPORTS
Production – 4150 (avg-4092 May-4150)
Yield 49.5 (avg- 48.7 May- 49.5)
US STOCKS 1045 (avg–987 May – 970)
Global 112.7 (avg-114.7 May – 113.1)
4. RAIN RAIN GO AWAY! – it keeps on raining and now producers are justifiably concerned with getting all their beans in – including all the acres coming from corn
Since we’ve never had planting delays like we have now, we’re certainly in uncharted waters! But two things we know for sure – we’re still plenty cheap & we have an entire growing season ahead of us! Strap in!!
July Corn has had two major market events that have combined to propel it to a $1.20 advance (345-465) since early May! First & foremost, a record slow planting pace has ensured that many thousands of acres won’t get planted – second, the USDA’s June 11 report was a bullish surprise – as the always conservative USDA was forced to come in very low very early this year due to the dire conditions in the corn belt – lopping a whopping 10 bu off the projected yield (176-166) ! Simple math tells us 9-10 mill less acres at 170bu/ac equates to 1.5-2BB less production than first estimated!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 653,875 (851,765) & Thur sales were a woeful 262,000 (350-850)
- PLANTING PROGRESS – is 92% in (lw-83 avg-100) – emerged 79(97) Ill – 88 (100) Ind – 84 (100) Iowa – 98 (100)
- USDA 6/11/19
Production – 13,680 (avg-13903 May – 15030)
Yield 166 ( May -176)
US Stocks 1675 (avg-1675 May – 2485)
Global 290.5 (301.6 May – 314)
4.HOW MANY ACRES LESS TO CORN? That’s a tough one to figure – because no one has a handle on the amount of “prevent acres”!
July wht has been more of a follower of July corn & beans than anything else during its “near vertical” $1.30 climb (420-550) since early May – and this past week’s action was no exception – as the entire grain complex became oversold & corrected. It seems the “planting delay fundamental” was played out & dialed into the price structure! However, for the wheat to hold any significant rallies, it will need a better export pattern!
The Aug Cat contract remains a puzzling enigma – as the sharp $20 break (121-101) into the strongest demand period of the year – the Spring Barbeque Season – would seem to offer an excellent buying opportunity – but it has not worked out that way! Instead, the mkt has been victimized by a hefty short term supply, slow export news & a weak cash mkt! Sooner or later, the worm will turn – but not yet!!
Equally confusing is the action in July hogs – that despite the ASF epidemic in China & the resumption of trade relations with Mexico, the mkt likewise has been unable to respond to a $20 break — right during the highest demand period for the year! Once again slack exports & a weak cash mkt seem to be the culprit! Also, the mkt seemed to have high expectations for robust exports off the ASF in China – but they just haven’t materialized! Finally – higher feed costs -meal & corn – have also been a drag on the meats!
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