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
A perfect storm converged upon the grain complex in the past week – resulting in a solid 50 cent correction in Nov Beans (1095-1045)! It was comprised of election jitters, Covid demand fears & rain prospects for South America & Russia! Still the underlying grain fundamentals are pretty solid – US Corn is the cheapest anywhere, US Soybeans are currently the only game in town (even Brazil is buying from us) & dryness persists in Argentina, S Brazil & Russia! And regardless of the recent run-up, beans are still historically in the bottom 20% of their 10-year price range! The uptrend could resume soon!
Dec Corn likewise has corrected (425-395) for the same reasons & is especially sensitive to a possible “ethanol drain” as the Covid Resurgence has once again put a crimp on US driving! However corn exports are running at 50% of the WADSE Estimates & could continue at a high level should South America stays dry! Corn harvest is 82% in & Beans are 87% done! Ag Resource estimates corn production at 14.635 & yield at 177.3! The US is the only reliable corn supplier globally until late May when S/A supplies come on line! The next Nov USDA Report is on Wed 11/11/20 at 11am – & is the final estimate of the year!
Dec Wht was able to buck the trend today – closing higher while Covid demand fears pushed the other grains lower! But the mentality is a little different for wheat as people are beginning to stockpile bread & like products fearing another shutdown -while the Covid resurgence has negatively impacted gas & food demand – shutting down restaurants & reducing driving! Overall, the Dec Wht will depend largely on Corn & Bean for spillover support for further advances – and all grains will be closely watching the likelihood of La Nina continuing to impact potential S/A production!
Since early July, Dec Cat has been in a $10 range (104-114)! In the past week, the mkt tested the bottom end of that range & responded impressively with a $5 rally! The fundamentals have been a mixed bag – does Covid mean less supply as slaughterhouses slow down with more employees infected or does demand take a hit with restaurants being closed down again due to the resurgence? Also, the cut-out was the highest since Oct 27 yet average weights approach 5-yr highs! The contrasted supply-and -demand has resulted in a sideways trading affair!
Following Dec Hogs stunning $23 rally (50-73) since Aug 1 on the back of prodigious China imports, the mkt corrected $9 (73-64) on rumors that their buying pace would fall off in 2021! But in the last 2 days – with the oversold condition corrected, the mkt has rallied! But much like the cattle, the outlook is mixed – with cash & cut-out at the lowest level since 9/16 – yet with the substantial-discount-Dec Hogs-are-holding-to-cash, supporting! And also does Covid mean less supply or less demand or both! Thus, we’ve morphed into a trading range!
Questions? Ask Bill Moore today at 312-264-4337