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
This past week exemplified the extraordinary power of Covid-19 – as positive supply/demand fundamentals got pushed to the side – in favor of the overall fear & uncertainty inundating all markets! A bullish Prospective Planting Report & favorable weekly exports weren’t enough to offset the negativity of the virus – resulting in a 27 cent loss
FACTORS IMPACTING THE MKT
- EXPORTS – Mon Inspections were 413,000 (400-700) & Thur sales were 1.071 (700-1.200)
- USDA PLANTING & QTLY STOCKS – TUES – 3/31/20 – 11AM – the #’s were friendly but it didn’t make any difference with Covid-19 lurking every day to quash rallies
ACRES – 83.510 (avg – 84.69 ly- 76.10)
STOCKS – 2,253 (avg – 2,237 ly – 2727)
- BOTTLENECKS IN SOUTH AMERICA – with the usual issues shipping grain out
- SHIFTING FOCUS – to planting as many producers are just a few weeks away
- MACROS – while the DJI only lost 600 points for the week, it felt a lot worse with the unemployment #’s issued Thursday & Friday – plus all the escalating incidences of Covid-19 being reported on a daily basis
- A WELCOME BEACON OF GOOD NEWS -would easily be the crude oil mkt – which showed a $7.00 weekly gain – a whopping 35% advance – on the heals of a reported agreement between Russia & Saudi Arabia
Many models show Covid-19 peaking in late April – we can only hope they’re right! A return to normalcy would reveal a grossly undervalued grain complex – May Beans remain in an uptrend – correcting 50% of it recent rally last week!!
May Corn had a mixed bag this past week – and that “stalemate” coupled with the “gloom & doom” of Covid 19 pushed May Corn down for a weekly 16 cent loss! Exports were stellar with over 1 MMT both Mon & Thur & the 35% jump in crude oil prices – was a possible harbinger for a recovery of ethanol demand! However the corn acreage came at a prodigous 97 MA – over the high end of the range & even though stocks came in at 7,953 MB – well under average & 2019 (avg-8,162 ly – 8,163). Overall, the acreage cancelled out the exports & crude rally – leaving the mkt at the mercy of the virus!
May Wht’s near vertical rally (494 – 588) pushed it into overbought territory & the mkt – as expected – corrected this week incurring a 22 cent loss! The contract had been feeding off several friendly fundamentals – food security – an expanding pipeline & Russia’s decision to limit exports! But the mkt fell prey to Covd-19 & weakness in its sister markets! However, the 40% correction still leaves May Wht in a solid uptrend!!
April Cattle succumbed to massive demand destruction & a growing April meat supply – losing $8.50 for the week (89.42 – 80.85)! With all the restaurants being closed & events being canceled, the meat is piling up! And this despite the fact June cattle is trading at a whopping $30 discount to cash (avg – $11)! And further upsetting the mkt were all the lofty unemployment #’s issued Thur & Fri. The mkt is grossly oversold now!
As bad as the cattle chart looks, it pales in comparison to the April Hog Chart which had 4 limit-downs last week, left 4 downside gaps in 6 mkt days & lost a staggering $16.00 (64.25 – 48.32) last week! A TOTAL FREE FALL! And yes the same issues as cattle – huge meat supplies building in April with minimal demand to “eat away” at those very burdensome stockpiles! However, DEMAND will recover very quickly once we return to some semblance of normalcy!!
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