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
Not so fast – you big crop prognosticators! All the glowing reports of record yields in the Western Corn Belt apparently have been more than offset by the disappointing yields in the drought-stricken Western Corn Belt! At least that’s what the USDA thinks – basis their August Report issued last Thursday! All the key #’s were under July, Prod – 14,750 (15,165), yield – 174.6 (179.5), US Stocks -1242 (1432) & Global Stocks – 284 (291)! This week, the well- respected Pro Farmer Tour is underway – seeking to corroborate the USDA estimates!!
The USDA Bean #’s weren’t so sanguine – coming in basically neutral against expectations – Prod – 4,339 (4,360), Yield 50.0 (50.3), US Stock – 155 (155) & Global Stocks- 96.2 (94.5)! However, the export picture has been much more exciting with today’s 8am flash sales of 132,000 to Unk & 198,000 to China! This on the heels of 8 consecutive days of flash sales – totaling 8 sales! So as rumored, China is definitely still a major player in our export mkt! Also, our annual Price Crop Tour reflected a sketchy bean crop – definitely not as good as the corn! The bottom line is that the projected crops are pretty close to 2020 – Corn 14.750 (ly – 14.182) & Beans 4.339 (ly – 4.135)! And with the very tight supply/demand balance sheet, that won’t be enough to replenish the pipeline!
The USDA issued a bullish crop report last Thur – well under the July #’s in the all the categories – Prod – 1.697 (1746), US Stocks – 627 (665) & Global Stocks – 279 (291)! As well, both the Russian & Canadian Wht Crops came in well under estimates! The expected result was a hard two-day rally which catapulted Sept Wht to new contract highs at 775! But they became over-bought & despite an 11% good-to-excellent crop ratings, the mkt is correcting today – down a healthy 23 cents – plus additional pressure is coming from the corn & bean mkts – reacting to better-than-expected yields coming off the Pro Farmer Crop tour now underway!
Oct Cat is clearly the upside leader – running to contract highs in Mid-June – & impressively consolidating just a few dollars of its highs – even as Oct Hogs broke $17.00 off diminished China pork imports! An excellent display of Bullish Divergence! More clarity about the Supply & demand will be revealed this Friday in the August Cattle-on-Feed Report! The boxed beef has been on fire & cash is soon expected to catch up! The only restraint on the mkt’s up is a consistent premium to cash – indicating a lot of good news has already been dialed in! But the resurgent US economy should feed it consistent demand this Fall to enable the mkt to breach its contract highs!
Oct hogs continuing nemesis this Summer has been China’s slow-down of US Pork import as they have rebuilt their hog herds to pre-ASF levels! Also exacerbating their imports has been the stubborn, unwanted resurgence of Covid thru the Delta Variant – which has put new restrictions on China’s economy! The saving grace for the Hog Complex is the simple fact the mkt overdid it on the downside – reaching an amazing $25 under cash (avg -$4)! This has helped support the mkt of late -with the perception much of the bad news is already dialed in! Renewed domestic Pork Demand should help to stabilize the mkt!
Questions? Ask Bill Moore today at 312-264-4337