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 all of a sudden, the USDA is admitting that corn stocks aren’t quite as plentiful as advertised – estimating Qtly stocks well under the range of guesses on their 9/30 Report! And this on the heels of a negative 9/12 USDA Monthly S & D – while bearish – ended with a key-reversal-up on the chart – it appears “the worm has turned” – about time!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 399,000 (400-600) & Thur Sales 494,000 (600-1000)
Mon 9/23 – 600,000 MT Beans to China
Tues 9/24 – 200,000 MT Corn to Mexico
Wed 9/25 – 581,000 MT Beans to China
Thur 9/26 257,000 MT Beans to China
Fri 9/27 126,000 MT Beans to China
Mon 9/30 120.000 MT Corn to Mexico
A real mixed bag with very anemic exports announced on Mon & Thur but fresh sales announced every day
- US/CHINA TRADE DEAL – China is on holiday for the next week – meaning no export business – but they’re scheduled to come to DC Oct 10-12 for more face-to-face meetings – the Trump impeachment Inquiry may take some focus away from the trade talks but many feel that Trump needs some kind of trade success to get re-elected next fall
- USDA QTLY STOCKS – was a bullish surprise – another head scratcher from the USDA whose reports have been hard to figure this season -issued on Mon 9/30/19 at 11am – the mkt immediately spiked upward
Corn – 2114 (avg – 2436 range 2370-2511)
Beans – 913 (avg – 980 range 940-1001)
Wheat – 2385 (avg – 2385 range 2200-2450)
- OCT USDA 10-10-19 – all eyes will be on this report – to see if the gov’t lowers the corn yield from their 168.2 bpa estimate in Sept which was above the average guess but still led to a higher close with upside-reversal type action on the charts
- HARVEST WEATHER – the warmer-than-normal Sept was just what the doctor ordered for advancing the maturation of the late-planted crop & has taken FROST out of the equation – but harvest-delaying rain is becoming an issue
- CROP RATING – good-to-excellent stayed at 57% – harvest at 11% (lw-7, avg-19)
Ill – 4 (30) Ind – 8 (19) Iowa – 2 (6) Ohio – 5 (10)
Dented – 88 (98) Mature – 43 (73)
- CHARTS – technically, a “head-and-shoulders” bottom -validated by a key reversal up following by the negative 9/12 USDA Report & Monday’s spike-up following the USDA Qtly Stocks Report – which eventually closed a downside gap left from early August
The mkt action is friendly – as Dec Corn has advanced up sharply following two Sept USDA Reports – one bearish & one bullish! Yields & trade news will dominate now!
Nov Beans are clearly the upside leader – taking out its August Highs after Mondays USDA Reports! The mkt is feeding off of several fundamentals – a delayed harvest 7% (20), lagging maturity 55% (76), lower carry-out #’s from the last two USDA Reports & some positive exports & trade rhetoric from the US & China! Also, the charts are positive with the contract easily holding over the psychologically important $9.00 level & retracing more than ½ of the June/Aug $1.00 break! The mkt will now focus on yield reports as harvest approaches the mid-point!
Dec Wht appears to have forged a low in early Sept – & has managed a 50 cent rally since then to validate same – Winter Wht is 39% planted (avg – 38) & Spring Wht is 90% harvested (avg )! Egypt has been tendering for wht from Egypt, Ukraine & France. Excessively wet weather in the Northern areas has hampered wht harvest! However the biggest mkt mover for wht will be improved exports & spill-over support from Corn & Beans.
Dec Cat clearly put in a spike low in early Sept – as it simply got way too cheap – falling some $28 off its May highs -with part of the decline exacerbated by the slaughter plant fire! However, the huge $3.50 downside gap left in the fire’s wake has been fully closed – a positive technical development! An uptrend in cash & an outlook for tighter supply ahead has fed the up – along with an accompanying rally in Dec Hogs! The mkt will need a continuing strong economy to extend its gains!
Dec Hogs has impressive upside chart action with some large upside gaps left still unfilled. The mkt has been fueled by consistent rumors that a US/China trade deal will significantly increase pork exports to China! Also, last Friday on the heels of a bearish Pig Crop report, the mkt – after spiking down – rallied hard for over $3.00! But this was the extent of its recent gains – as it suddenly realized he had reached a massive premium to cash at a time of the year when its normally discount! So profit-taking ensued – but it appears hard breaks can be bought!
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