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
Yesterday was a perfect storm of bearish factors that forced a meltdown at the CBT including rain in certain M/W corn & bean areas, a pervading fear emanating from the Fed that IR increases were imminent to combat inflation & paltry export sales! No commodity was immune from the sell-off as the energies, metals & meats all got blistered! But the downside was way overdone – as the mkt is making a sharp recovery today! You just can’t write an OBIT on the grains until we see how the July & August weather turns out! And also monitor whether rain forecasts come to full fruition! With domestic & global stocks on 7-8 year lows, we don’t need a full-fledged drought to move prices up-just below avg yields!
Exports have been paltry of late & hot & dry weather have replaced them as the upside impetus! As you can see, the mkt has already made quite a significant move to the upside & has high level of volatility due to the large fund participation! Last week, we had a favorable June WASDE Report but weather trumps all & a wet, cool forecast sent the CBT tumbling! Even lower good-excellent crop ratings this past Monday couldn’t stop the bleeding as even more rain was put into the forecast! This time of the year, the mkt trades from weather forecast to the next weather forecast – then observing closely if the forecasts delivered everything they promised! With the critical July/Aug time period dead-ahead, the mkt at worst should maintain a sideways bias with an upside leaing!
All eyes will be on the June 30 Acreage Report which will update the March 31 report! Most pundits expect a 1-2 MA increase from corn’s 91.1 MA & bean’s 87.6!
July Wht is moved equally by the weather forecasts – much like its Sister Mkts corn & beans! It has conflicting fundamentals as the Spring Wht Good/Excellent ratings are low but the Winter Wht harvest is progressing nicely! But probably the biggest influencer is still the spill-over from the C/B rallies & breaks!
Aug Cat has taken over upside leadership from the Aug Hogs – as the mkt is feeding off excellent demand from the very robust economic recovery & the always important “grilling season”! At one time, remarkably, Aug Cat & Aug Hogs were trading at the same price but now Cat Futures are $14 over Hog Futures – a much more conventional differential!
It was bound to happen! The flower is quite obviously off the rose! It had been rumored for a long time that China relentless importing of US Pork couldn’t keep up forever and it looks like the day of reckoning has arrived! There are numerous reports out that they have finally rebuilt their previously decimated hog herd to the point where their imports of our pork will wane! Plus, the sky high price of corn & meal is a negative for the hog complex finally, near record high pork prices looks to have finally choked off demand!
The Bull Mkt isn’t completely finished what with the US Economic Rebound in full flight but it will certainly take a breather!!
Questions? Ask Bill Moore today at 312-264-4337