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
The mkt rallied steadily all week – on the back – of positive trade rhetoric but it took just one geo-political incident to erase all the hard-gotten gains – in just one day! The Iran incident, while not directly related to bean exports, still introduced enough uncertainty into the mkt – to cause a sizeable down last Friday – though half those losses have been recouped!
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections – 963,830 (500-1,000) & Fri Sales – 332,000 (350-1.0)
- US/CHINA PHASE ONE TRADE DEAL – we’re closer to fruition – with a Chinese delegation due in DC on Jan 13 & a signing scheduled for Jan 15
- JAN CROP REPORT – we’re looking for a slight reduction across the board – production – 3516 (Nov – 3550) Yield – 46.5 (Nov – 46.9)
- SOUTH AMERICAN WEATHER – Brazil Bean Crop is forecast to be a record –as timely rains have fallen in the Southern Hemisphere
- PRODUCER SELLING – farmers aren’t opening their bins – so a mkt rally is needed to extract any grain from storage
- SHORT OPEN INTERST – a still sizeable portion of the open interest is short & will have to buy itself out – upon further upside!
- THE US DOLLAR – reached 6 month lows last week – with the Brazilian Real rallying – a good combination for US Exports!
- US DRONE ATTACK ON IRAN – on Friday rattled the markets – even though there was no direct impact on bean exports – but the political uncertainty of the event was enough to induce profit-taking on a Friday
- CHEAP ENOUGH – believe it or not, bean prices are the same level as they were in 2009 much freer trade – world wide – coupled with a competitive price should be a recipe for higher prices in 2020!
There is enough geo-political, supply/demand fundamentals – swirling around this week – both positive & negative – to keep this mkt range-bound until Mid-Jan!! On the plus side, the WASDE Report on this Friday 1/10/20 is forecast to come in with lower #’s for production, yield & carry-out! Also, the signing of the US/China trade deal on 1/15/20 – should usher in a new era of China buying! On the negative side, the Iranian crisis is still hovering over the mkts – possibly disrupting export flow – and South American weather continues to be bearish with ample rains & no excess heat!!
Mar Wht’s 20 cent correction (568-548) was in part due to an overbought condition – as the mkt reacted after a solid up – much enhanced by the falling US Dollar! But the Iran Crisis introduced serious supply/demand concerns – not just a knee-jerk reaction – as Iraq is a large US Wht customer – also forecasts for snow over the Black Sea region should benefit Russian & Ukrainian crops! But finally longer-term, the Phase One signing of the US/China Trade Deal could well include Chinese wheat purchases!
Pundits have been predicting a top for a long time, but every time the mkt looks like it’s ready to roll over & die, it doesn’t! The last three days are a perfect illustration – last Friday, the mkt fell to 3-week lows – but the very next trading day, PRESTO – the mkt surged over $2.00 to the top of the range – only to trade back lower today! So the mkt can’t seem to make up its mind -mired in a congestion area for several months now. The fundamentals lean toward a top – higher placements for the last 3 COF reports – a 540 million pound production increase from the 1st to 2nd Qtr – the largest since 2008!!
The Feb Hog contract seemingly has the supply/demand fundamentals to move higher but it’s not happening and traders are growing increasingly skeptical!! Of Course, the imminent signing of Phase One has the “export hopes” sky-high but in the interim, the mkt is trading short-term fundamentals – which week after week, feature near-record pork production! So until, the Us/China Accord translates into actual increased exports, the mkt will defer to the short-term bearish supply!!
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.
To SUBSCRIBE to the AGMASTER please go to http://bit.ly/xIGR6x.
Questions? Ask Bill Moore today at 312-264-4337