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
As harvest winds down, the mkt is buffeted back & forth by ‘trade war headlines” and daily updates on the South American growing weather! Clearly the 800 POUND GORILLA in the room is the trade deal & its ultimate resolution! The grains have languished thru the trade uncertainty but the DJI makes record highs daily on “trade optimism” – that bodes well!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 637,397 (400-700) & Fri sales were 581,000 (400-800)
19 Nov – 191,000 MT – Unk
18 Nov 132,000 MT – Unk
8 Nov 217,040 MT – Unk
- HARVEST PROGRESS- corn is 76% in (lw-66 avg-92) Ill – 80 (97) Ind – 80 (91) Iowa – 77 (93) Ohio – 75 (97) all but in – and as usual, the last 25% will be the hardest to get in & the worst yielding
- US/CHINA TRADE DEAL – a quintessential “headline event” with the mkt “ebbing & flowing” almost every day – off the latest news or tweets – positive or negative – coming out of DC or China! Of course, everyone has an opinion – ours is it will happen before year’s end!
- NOV CROP REPORT – our last from the USDA until the January Final – has pegged production at 13.661 (ly- 14.420) & yield at 167.0 (168.4)
- BIG SHORT POSITION – many are “beared up”, but if they’re wrong, they’ll contribute big-time to a turn-around rally!
- LOW PRICES CURE LOW PRICES!! Prices have declined to levels that could augment feed usage, ethanol demand & exports!
- HARVEST IS ALMOST OVER – which will remove one bearish fundamental from the equation!
They’ve thrown everything at this mkt but the kitchen sink -it needs a catalyst to rally – a trade deal, South American weather issues or an export surge!!
Jan Beans have steadily eroded in November – due to a gridlock on trade talks – and despite excellent weekly exports & a general wind-down of harvest pressure (91% in)! Technically, the mkt is reaching a 50%-60% retracement level from Sept (860-960)! Selling the mkt at this time of the year at these price levels – doesn’t seem prudent! The producer sure isn’t doing it – the mkt will to rally to release any grain from the bins!!
Dec Wht is up about 6 cents for the month – reflecting a truly sideways, trading range mkt where negatives are offsetting positives – resulting in a mkt currently going nowhere! Exports have been mediocre, the price level could attract exports, the Winter Wheat crop is ok, the trade deal is hanging in the balance & Global carryout is burdensome! It all adds up to SIDEWAYS – as the above chart indicates!!
After a stellar upside run of over $20, pundits are calling for a top – The Feb Cat Contract is $10 premium to cash (normal is $3) & the Friday Cattle-On-Feed is reported to show placements of 11-12% over last year. But the mkt stubbornly hangs in there – fed by a strong cash mkt! The trend still is your friend!!
On the other end of the spectrum is Dec Hogs – who have been trying to carve out a seasonal low – riding the hopes of huge export potential – contingent on a trade resolution – but failing that, have succumbed to the short-term pressure of record high weekly slaughter! The disappointing result is new lows for the move – as the contract heads for the contract lows scored in mid-Sept!!
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