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
Well, here we are – right back at square #1 – after the slowest planting pace in recent memory! So what happened to “yield drag” & “prevent acres”! Conventional wisdom says that production & yield loss have been offset by “demand destruction” from the trade war- negating any positive effect the planting issues would have had on corn prices!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur Exports were 856,000 (350-800) & Tues Inspections were 355,411 (500-800) –
- CROP CONDITIONS – good/excellent improved overall from 57 to 58%! Ill – 46 (49) Ind – 33 (32) Iowa – 62 (65) Ohio – 34 (30) Dough 81 (93) Dented 41(63) Mature 6 (13)
- CROP PREDICTIONS – have been reduced the USDA’s highball Aug est – 169.5 The Pro-Farmer Tour estimated 163.3 but Allendale came in at 167.7
- US/CHINA STALLED TALKS – continue to give the mkt fits – as new tariffs were officially implemented on Sept 1 – but there is still conversation about another “face-to-face” sometime in Sept! We’re privately wondering why the two biggest economies in the world can’t grasp the “simple concept” that no one wins a trade war??
- EARLY FROST – gets a lot of lip service this year but until some sub-40 temps start appearing in the weather forecasts, the mkt won’t react much
- THE US DOLLAR – has been a bullish stalwart rallying nearly 400 points since Late June – not a friendly development for an already export-starved corn mkt
- GLOBAL ECONOMIC WORRIES – have already led to volatile “flight-to-quality” Rallies in gold & silver & severe breaks in the Dow Jones! President Trump Has to realize a continued trade war with China could severely jeopardize his Re-election chances!!
We’re too cheap – harvest will show very disappointing yields – a trade deal may become a political necessity – and remember LOW PRICES CURE LOW PRICES!!
Today the mkt is capitulating – reacting to diminishing hopes of a US/China trade resolution & higher yield estimates from private forecasters – in front of the USDA Sept Crop Report due out next Thur 9/12 at 11am! As well, temps thru the end of Sept are forecast to be higher than normal – reducing the “early frost potential”! Strangely, the Macro Mkts are reacting more strongly to the overnite news that October face-to-face talks between US & China are scheduled – with the DJI up 400 & Gold down $34 & silver down 72 cents! Traders are justifiably wary of the Sept Report – given the bearish bombshell issued in August!
The normal “weak-sister” Wht Mkt has stepped to the front of the class – rallying some 20 cents off its Tues lows – the welcome beneficiary of an active international export Mkt involving Turkey, Jordan, Japan & Saudi Arabia – as well as a falling US Dollar (200 points In 3 days)! However, any sustained rally will probably need a “big assist” from Corn & Beans!
The Oct Cat contract was struggling any way – amidst the best demand period of the year – before the packing plant fire – just about a month ago – decimated the mkt for a sudden $7.00 drop! The huge downside gap (104.50 – 101.50) that was left is a bearish technical signal! Today, weak cash has forced the mkt to new lows! The mkt could really use some solid export demand – that would accompany any trade deal!
Oct Hogs have managed to rally $9.00 (59-68) just on the prospect of improved export business from China off a “done trade deal”! Of course, that deal seems to be a long way away – but nonetheless – the mkt feels it will become a reality. With China’s hog herd getting decimated by the ASF & with our surplus of pork, it seems to be a natural fit for the US & China to collaborate on a deal! The other positive is the sheer cheapness of the price level to which Oct Hogs have dropped – a fact not lost on value-conscious consumers!
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