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 stunning $6.00 rally since mid-2020, May Beans have morphed into a consolidation pattern while the trade focus shifts from the Southern Hemisphere to the Northern Hemisphere! As well, with S/A supplies coming online at cheaper prices than the US, our export share has dropped! But make no mistake, with stocks depleted to 5-6 year lows due to El Nina in S/A & record exports to China, we NEED a substantial crop – just to replenish stocks! So there is no margin for error for the US crop – soon going into the ground! In addition, there’s a bullish WILD CARD – a resurgent US/global economy which promises to increase demand across the board – from gas (ethanol) to burgers & brats!!
Much like its sister mkt, May Beans, May Corn has fallen into a sideways trading pattern after a dramatic $2.00 rise since last Fall! China’s buying pace has slowed & the damage to the S/A crops is becoming dialed in. However, todays Inspections were stellar at 2.203 MMT (1.2 – 1.9) & have contributed to a 10 cents higher mkt! The demand side of the equation has been exclusively China’s voracious appetite for our corn with domestic demand being almost entirely shut down by Covid! But the “worm is quickly turning” as an expected robust US economic recovery will markedly increase driving & thereby ethanol demand! And should the El Nina that has ravaged Argentina & S Brazil move North, well then “Houston We have a problem”!!
Rainy weather in both hemispheres have pressured wht futures in the past week – in the US, moisture in the Central & Western Plains have been beneficial to the Winter Wht Crop & in Argentina, much needed rains have alleviated some of the drought stress there for corn & beans spilling over into the May Wht! In additional, a slumping US Dollar has made US Wht exports less competitive on the world mkt! However, a 10-higher day in May Corn bolstered the front wht contract today! Generally, wht needs a big assist from corn & beans for any sustained upside moves!
Despite solid underlying fundamentals, April Cat has a very difficult time moving beyond the tight $3.00 range (120-118) its been confined to since Mar 1! And this inertia even with a surging hog mkt! It may be the contract got ahead of itself – reaching too much premium to cash! Yet, with the tremendous economic promise ahead– with vaccination become widespread, many restaurants re-opening and consumers receiving covid relief checks this week, it should be only a matter of time before cattle resumes its up!
An unrelenting Bull – feed by China’s seemingly insatiable appetite for US Pork & a very strong Pork Cut-out – has resulted a near-vertical $20 rally since Jan 1! Adding to the upside euphoria is perceived big jump in domestic demand – fed by an improving economy rejuvenated by 3 vaccines & stimulus checks!
Initially, it was thought China demand would wane in 2021 but a resurgence of ASF in their country has kept their US imports pretty close to last year!Questions? Ask Bill Moore today at 312-264-4337