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
Dec Corn exploded on Friday for no apparent reason for a 9 cent gain & has extended these gains on Mon 12/2 -with as much as a 4 cent rally! The usual fundamentals thought to be needed as catalysts for an upside move – South American weather & a Phase One trade agreement were not “in play” for this move! Lack of producer selling was a factor!
FACTORS IMPACTING THE MKT
- EXPORTS – Fri Sales were 806,000 (600-900) & Mon Inspections were 428,000 (500-700)
- HARVEST PROGRESS – corn is 89% in (lw – 84 avg – 98) Ill – 93 (100) Ind – 93 (98) Iowa – 92 (99) Ohio – 90 (95) This is the final harvest report from the USDA this season
- US/CHINA TRADE DEAL – today the rhetoric was negative as President Trump said that while he favors a deal, he thinks it may not happen before the 2020 election
- NOV CROP REPORT – our last from the USDA until the Jan Final – has pegged production at 3.550 (ly – 4428) & yield at 46.9 (ly – 50.6)
- SOUTH AMERICAN WEATHER – is a mixed bag with Brazil in good shape while Argentina is on the dry side – bordering on a mild drought
- TECHNICAL OPTIMISM – starting with last Friday’s surprise upsurge, Mar Corn is flirting with 3 higher closes in a row!
- HISTORICALLY CHEAP – often forgotten by casual traders is the fact that Mar Corn is in the bottom 20% of 10 year range ($3 – $8)
- NO PRODUCER SELLING – the farmer is not selling at these levels – so the mkt will have to rally if it wants grain
- NO DELIVERIES AGAINST DEC CORN – normally a positive for prices!
Corn futures have rallied 14 cents for no apparent reason – and even today went up despite negative trade talk from Trump & and DJI trading over 400 lower! Sometimes a mkt just gets too cheap!!
Jan Beans have closed lower 8 consecutive days in a row – losing 40 cents in the process! And this – despite impressive weekly exports – Fri Sales (1.66 MMT) & Mon inspections (1.547 MMT)! The culprits are formidable – benign growing conditions in Brazil portending another large crop & the endless, non-productive trade talks that never seem to work out! However, they say “low prices cure low prices” and we’re reaching down into historical support – with the mkt very oversold- so very possibly, the lows are close!!
After a near vertical 60 cent upside run since Mid-Nov (498-551), Dec Wht came back to Earth – retreating 20 cents in the past 2 days! The mkt looks to have dialed in the sharp drop in Australian wht production, the various production issues in the Black Sea & other European locales & finally the considerable uncertainty of the US Crop just planted! Also adding to the pressure was the on-again-off-again nature of the trade talks – which have kept Corn & beans sideways – providing headwinds against the wheat’s rally!!
Like waiting for the other shoe to drop! Pundits have been calling for a top in this mkt for some time – the $24 rally since Mid-Sept seems to have fully reflected the current supply/demand fundamentals! The mkt holds a hefty premium to cash! The 7-10 weather forecast is slightly bearish (no storms) – and placements are the highest in years! Finally, last Friday 11/29, the mkt scored a KEY REVERSAL DOWN (new highs followed by a lower close)! Today, the mkt is lower – so at the very least, we have a solid correction –whether that turns into a full-blown down mkt probably depends on what the stock mkt does!
Much like its “sister mkt” Dec Cat, Dec Hogs is grappling with a significant turn-around – in this case – trying to “carve out” a low -much like Dec Cat has been toying with a top! After grinding down $12 (72-60), the mkt seems to have dialed in big weight & record slaughters! Yesterday was a good example, as the mkt, after opening lower off negative trade rhetoric, rebounded to close up over $2.00! Not going down on bearish news is very indicative of a sold-out mkt! However, to register a definitive low, Hog futures need significant exports – which a “signed” trade deal will provide!!
141 W. Jackson Blvd. Suite 1920 Chicago, IL 60604 | (800) 769-7021 | (855) 264-6673 (Direct) | www.pricegroup.com
A Subsidiary of Price Holdings, Inc. – an Employee Owned Diversified Financial Services Firm. Orders must be entered via direct verbal communication with a representative of our firm. We cannot be held responsible for orders left in any other manner. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Investing in futures can involve substantial risk & is not for everyone. Trading foreign exchange also involves a high degree of risk. The leverage created by trading on margin can work against you as well as for you, and losses can exceed your entire investment. Before opening an account and trading, you should seek advice from your advisors as appropriate to ensure that you understand the risks and can withstand the losses. Member NIBA, NFA.
The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or futures. The PRICE Futures Group, its officers, directors, employees, and brokers may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Reproduction and/or distribution of any portion of this report are strictly prohibited without the written permission of the author.Questions? Ask Bill Moore today at 312-264-4337