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
It’s been a topsy-turvy trading affair since the USDA 7-11-19 Supply & Demand Report came out – a bearish report indeed! However, the trade wasn’t really buying the #’s and after spiking lower, the mkt rallied sharply – extending over 30 cents the next two days! But then a cooler, wetter weather forecast forced the mkt give back all those gains!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 676,000 (500-800) & Thur Inspections were 332,000 (250-500)
- CROP RATINGS – improved with good/excellent going from 57 to 58% – silking was 17% (42)
- YIELD & ACRES UNCERTAINITY – getting a handle on the number of “prevent acres” & potential yields is difficult now – the August Crop Report on 8-12-19 should provide some clarity
- US/CHINA TRADE RESOLUTION – tele-conference calls are underway which will hopefully morph into a resumption of face-to-face meetings
- US/EUROPEAN WEATHER MODELS -call for a cooler/wetter period in the next 7-10 days – which has pressured prices
- TECHNICAL PICTURE – after the initial $1.15 surge in May/June, the mkt has fallen into a 40 cent range – awaiting an acreage & weather update
The early planting delays have established a floor for the corn mkt – as some of the damage exacted on the crop is irreversible! However, there is still much uncertainty about the number of acres lost to beans & prevent planting and how well the late-planted crop will yield. The Aug 12 Crop Report with adjustments from the crazy June 28 Report will answer some of these questions & time will answer the rest! The questions about the crop along with a cooler/wetter weather trend have pushed the mkt into a sideways pattern! But we feel when all the smoke clears, prices will reflect a corn crop that is much worse than many think!
Sept Beans have staged a remarkable rally today to the top end of their recent trading range – on the back of US/China trade rumors. The scuttlebutt is that teleconferences will transform into actual face-to-face productive trade talks that may result in some kind of concrete agreement! Given the futile history of these talks, that seems unlikely – but with Donald Trump – you never know!! And indeed, a resolution would be more than welcome!!
Mostly, Sept Wht rides the coattails of Sept Beans & Corn – so it’s the perennial weak sister – however, one fundamental that could trump that would be US Wheat becoming competitive on the world mkt – which it isn’t right now! With massive world carryover stocks, exports are sorely needed to whittle those down to size – but they aren’t happening – as long as the US prices are over the world price!
The convergence of several fundamentals has finally cratered the cattle mkt and it’s high time: the onset of the strongest demand period of the year for the meats, a marked reduction in production from the 4th Qtr to the 1st Qtr & a $30 break in the mkt (103-73) to attract solid demand!
Along with Aug Cattle, Aug Hogs have also “turned the corner” – the beneficiary of $30 break into the best seasonal demand period of the year! In addition, there is rising optimism that China would finally become a big customer of ours due to a trade deal resolution & the decimation of the Chinese hog herd due to ASF – which has reputedly thinned their herds by at least 20%!!
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