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
Benevolent growing weather & a souring US/China trade accord have forced an 80 cent drop in Sept Corn (470-390) – however, that was enough – as the mkt has slipped Into a congestion pattern – with a very dry Eastern Corn Belt & a major USDA Report (8-12-19) forcing traders to even up & lighten up this week!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon inspections were 645,367 (600-750) & Thur sales were 272,000 (300-750)
- CROP CONDITIONS – Gd/Ex went from 58 to 57 Ill – 44-41 IND – 36-36 IA 65-66 OH – 34 -34 Silking – 78 (93) Dough – 23 (42)
- Will be more significant than your normal August Report – as it will Include adjustments from the bogus USDA June 28 Acreage Report Corn Prod Est – 13,164 (July-13,875 2018- 14,420) Yield – 165.1 (July-166.0 2018 – 176.4)
Stocks 19-20 1,603 (July – 2010)
Global 19-20 290 (July -298)
- US/China – the rhetoric & tweets have been basically negative & no more Face to face meetings until Sept – it’s looking more & more like the Chinese are willing to wait until 2020 when the Trump Factor might be Different
- A VERY DRY EASTERN CORN BELTH – Eastern, ILL, Ind & Ohio could really use “a drink of water” – as evidence by the above crop ratings
- LOWER INTEREST RATES – have broken the US Dollar 150 points – a big plus for the export- staved grains.
- INFLATION – Gold is up $30 today and silver is up 72 cents – signaling that inflation is right around the corner
The market action in the past month has been decidedly bearish – but we feel it belies the poor condition of the US Corn Crop – and it might take until harvest for the actual damage to become clear! Meanwhile, we’re all anxious to see the #’s on the August Crop Report this Monday!
A “flash drought” in the Eastern Corn Belt has finally got the mkts attention! Good-to-excellent ratings in Ill (41), Ind (36) & Ohio (34) are well below average & the 7-10 forecast is more “warm & dry” -not the best for the shallow rooted crop! However, this coming Monday, all eyes will be on the 11am USDA Crop Report – to see how much Down they adjust the acreage after their bogus June 28 Report!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 1,029,010 (600-1,100) & Thur sales were 419,000 (100-700)
- CROP CONDITIONS – gd/ex stayed unchanged at 54%
Ill – 44-40 Ind – 36-36 Iowa – 62-65 Ohio – 30-29
Blooming – 72 (87) Setting Pods -37 (63)
- USDA REPORT – 8/12/19
Bean Prod – 3,783 (July – 3,845 2018 – 4544)
Yield 47.5 (July – 48.5 2018 – 51.6)
US Stocks 818 (July – 795)
Global 106 (July – 104)
- FLASH DROUGHT – we’ve heard of “flash floods” but never “flash droughts” – until this week – but that’s the term they’re Using to describe the “hot & dry” conditions in the ECB – And especially with the mkt over-sold & 70 cents off its highs, the price is responding on the upside
Production is down & so are exports! Which is more! That’s the $64 question & probably won’t be answered until harvest! Thus we have SUPPLY BULLS & DEMAND BEARS duking it out until then!
Export woes continue to plague the grain complex – and the wht was probably The first to be victimized – as it’s price on the world mkt is not competitive! This is why Most every time Egypt tenders for wht, the US is excluded! The only other “rally potential” Would be of the “spill-over” variety -from Corn & Beans – and of late – that has been a factor – As very arid conditions are assaulting the Eastern Corn belt – leading to today’s rally in front Of the USDA Aug Report Mon at 11am!
Needless to say, this chart action is very disappointing for the BULLS who expected A $20 dollar break into the very best DEMAND PERIOD of the year to generate some kind Of rally with follow-thru! Instead, we have morphed into a sideways pattern – hovering only a few dollars over the June Lows! The culprits have mostly been Macro – a failed US/China trade deal & concerns about a Global Recession!
We have learned the hard way – that expectations are just that and no more!
This year we started out with some great ones- substantial exports generated by the ASIAN SWINR FEVER (ASF) & a resolution of the US/China trade issues! But those exports Never materialized & the mkt promptly erased the premium it had built up for those exports! But in doing so, it dropped to levels that attracted some demand – especially of the “barbecue variety” & it now appears a seasonal low has been established!
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