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
After a $2.20 rally (8.60 – 10.80) since the Aug WASDE Report, the mkt is “catching its breath”! The crop is 75% in & harvest pressure is essentially off the mkt – not that it ever impeded the run-up – which indicates the mkt’s formidable underlying strength! Going forward, the major fundamentals will be the unrelenting Chinese Demand & the dryness in South America & Russia during their critical planting period! The new Supply/Demand Balance Sheet really doesn’t have any “margin for error” – as far as production shortfalls globally! And despite their recent $2.00 up move, Beans are historically cheap still residing in the lower 20% of their 10-year trading range! And the macros are favorable with a better economy & lower $
The Dec Corn contract successfully negotiated the $4.00 level – closing over it last Friday! Often times those “round #’s” give the mkt difficulty but not this time! Today the Chinese Dalian Corn Futures Jan Contract closed at a record high $9.86/bu – which lended support to Dec Corn! China’s voracious appetite continued this morning with a flash sale of 345,000 MT plus another 123,000 MT to Mexico! Nobody knows how devastating the floods were to China’s corn crop but they keep buying our corn! Harvest is 60% in (avg-43) the simple fact that the contract was able to rally 80 cents during the heart of our harvest – speaks volumes about the mkt. And much like beans – even after their stout rally, they’re still in the bottom 20% of the 10 year range! Should South America deliver a sub-standard crop, then prices are too low – especially if China continue its relentless buying!
Since mid-Sept, Dec Wht has gone nearly vertical – rallying $1.00 (535-635) to 6 year highs – mostly on the back of extreme dryness in Russia, the Ukraine & the US Central Plains – during the critical planting period! The US Winter Wheat Crop is 77% in (avg-72) the mkt has continually labored under the weight of record world stocks -but they now seem to be dialed into the price! And even though US Wheat exports have been sketchy of late, China has recently shown interest in our wht! So much like corn & beans, the wht mkt is becoming much more sensitive to potential supply shortages around the world!
Dec Cat was bludgeoned into submission today – losing $3.50 – & a total of $8.00 (113-105) in just the past 6 trading days! The main culprits – as they have been for some time – are a current elevated slaughter & suspect 4th Qtr Demand – being unable to absorb it! The Covid resurgence has cast into serious doubt the normally excellent seasonal “D” that cattle normally experiences! As well, both cash & cut-out have slumped recently!
Dec Hogs continue to be the beneficiary of exceptional export demand from China & Mexico – and in just 5 mkt days, this “D” has propelled the contract on an almost straight-up $8.00 path (65-73)! In fact since early August, the contract has gained over $23 while its sister mkt Dec Cat has languished under the weight of negative supply/demand fundamentals! Clearly, the difference is China’s massive buying of our pork – much like for our corn & beans!
Questions? Ask Bill Moore today at 312-264-4337