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
Wow! Who saw that coming! After reaching 7 year highs a week ago, an extremely overbought bean mkt corrected violently 10% (1440 – 1300) – in just 4 mkt days! Sure – there were some rains in South America & the mkt was really stretched out – but nothing we felt to justify such a massive move! But in retrospect, with record fund length, such volatility often goes with the territory! But going forward, the longer term fundamentals really haven’t changed – a generally dry S/A, stellar exports (2.92 Fri, 1.97 today), shrinking stocks, a declining US dollar & an improving global economy! The mkt has morphed into consolidation mode with an upside bias – from a steep uptrend with key US pltg dead ahead!
Mar Corn also corrected substantially since breaching 7-yr highs – weighing in at 8% (540 – 500)! What’s remarkable about corn is its ability to rally $2.00 without any help from ethanol demand -totally muted by Covid! And as well, it remains the cheapest attention from importers! Finally, US Corn remains the “only game in town” until S/A comes on line – several months down the road! So corns “secret weapon” – the resumption of US Ethanol Demand in 2021 – depends wholly on the progress of vaccine dissemination but it appears to be Bidens primary goal now! Historically, at $5.00, corn is in the middle of its 10-year range ($3 – $8)! There will be pressure on the 2021 US Corn Crop to make up the deficit left by a substandard S/A crop! Indeed, there is no “margin for error”!
Much like Corn & Beans, the biggest reason for the sharp correction was an extreme overbought condition! However, there were some additional bearish factors including some rain in the central plains, an already-dialed-in Russian Export Tax & mediocre China export interest! Once again, Mar Wht will need spillover support from C & B to resume its up – which we fully expect to happen!
Feb Cat has ridden Vaccine Optimism & sharply lower feed costs to 9-month highs at 117! However, a bearish Cattle-On-Feed Report Friday tempered those gains today – as January placements came in at 100.8 % (97) – the highest since 1996! Still, the dominant fundamental for the cattle complex is the expectation of much improved demand derived from a the economic expansion ahead in 2021!
Feb Hogs continued their $4.00 rally (66.50 – 70.50) on the back of cheaper feed grains & improved demand – both domestic & export! The pork cut-out reflected that price optimism last week gaining 3.2%! Domestic D is benefitting from the Economic Recovery & Export D from China has maintained a relatively high level – despite rumors it was on the wane!Questions? Ask Bill Moore today at 312-264-4337