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
US/China trade rhetoric is like a yo-yo – up & down – good & bad – and the mkt has appropriately reflected that during the month of Oct – staying range-bound as the above chart indicates! Coupled with that is the crop uncertainty due to the late planting – where actual production & yield probably won’t be known until the Jan USDA Report!
FACTORS IMPACTING THE MKT
- EXPORTS – Thur Sales were 549,000 (300-800) & Mon inspections were 380,000 (450-650) 135,000 mt Meal – Phillipines, 132,000 mt Beans – Unk, 132,000 mt Beans – China
- HARVEST PROGRESS – Corn is 41% in (lw-30 avg – 61) Ill – 54 (80) Ind – 48 (66) Iowa – 26 (53) good/excellent – 48% (46) maturity – 41% (61)
- NOV CROP REPORT – FRI – 11/8/19 – all eyes will be anxiously awaiting the USDA’s latest estimates – this will be the final report for 2019 with final #’s due out in Jan 2020 – Informa’s predictions – just out today – reflect a little higher #’s – yield – 168.6 (USDA – 168.4) production – 3.553 (USDA – 3.550)
- US/CHINA TRADE TALKS – It seems, every other day, headlines come out that refute the previous day’s news – Phase 1 is scheduled to be signed in Mid-Nov in Chile – then the venue is scratched due to civil war – & they’re looking for a new place – then China says they may not sign any additional trade deals after Phase 1 due to the inconsistent nature of the Trump administration – so who knows – our bet is eventually a deal will happen because both sides need it – regardless of the “posturing”
- HISTORICALLY CHEAP – Corn prices are in the lower 20% of a 10 year range ($3-$8) – as we mentioned in our last letter – so a lot of supply/demand bearishness is already dialed in
- EARLY HARVEST LOWS – were scored in early Sept and validated by a $.50 rally (352-402) since then!
We feel the “down” has clearly been removed from the equation – and that leaves “sideways or up”! The later option should prevail – especially with a successful trade resolution!!
Nov Beans have managed a $.90 rally (845-945) since early Sept off the US/China trade optimism & an improving export picture! Just today the 10am grain inspections showed a robust 1.5 MMT & last week there were frequent 8am sales announcements! The mkt will sideways trade this week in front of harvest progress estimates today & the Nov USDA on Fri!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon inspections were 1,480,000 (850-1,500) & Thur inspections were 943,000 (500-1,100)
- US/CHINA TRADE DEAL – the latest scuttlebutt has the Phase One signing between the trading behemoths occurring in Iowa sometime in Nov!
- HARVEST PROGRESS – beans are 62% in (lw-46 avg – 78)) Ill – 96% (avg – 100) Ind – 96% (avg-100) Iowa – 97 (avg – 100)
- USDA NOV CROP REPORT – FRI – 11/8 – #’s are expected to be close to Oct Yield – Oct USDA – 46.9 FC Stone – 47.5 Informa – 47.0 Prod – Oct USDA – 3.550 FC Stone – 3.570 Informa – 3.553
A trade deal (Phase One) should soon be signed & harvest pressure will soon be past the Mid-point – two positives furthering an up mkt!
Egypt tendered for 235,000 MT of wht – so far they have bought 3.605 MMT with 50% from Russia – 21% from Ukraine – 20% from Romania & 8% from France! The mkt will closely monitor the USDA Report on Friday – as well as the mkt action in corn & beans for directional clues!
This stalwart bull mkt keeps threatening to top out – as it is extremely overbought and is at a big premium to cash – but strong cash & beef keep it afloat – however, expected strong placements in Oct due to be reflected in the Nov COF on 11/22 may finally do the trick!
While Dec Cat is threatening to put in a top, Dec Hogs are on the other side of the spectrum – toying with establishing a low as near-record production – week to week & a jump in avg weight last week – has staved off the promise of future exports from China once the trade deal is finalized and kept Dec Hogs under continuous pressure!
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