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
July Wht has been confined to a broad trading range since Mid-March (970-1140) as opposing fundamentals square off & neutralize each other! The initial war premium proved to be excessive after futures nearly hit $13 but the mkt found support from the ongoing drought in the plains that has good-to-excellent ratings at 27% on the Winter Wheat! Further underpinning the mkt are planting delays in the Spring Wht crop at 9% in (avg -28)! Finally, India & Pakistan have poor crops which may force them to ban exports -which could funnel to the US!!
Likewise, July Corn is also locked in a 3-wk 45 cent range (780-825) – being buffeted to & fro by a plethora of factors -both plus & minus – thus neutralizing prices – albeit just 30 cents off the record $8.27 – scored in 2012! Very slow initial planting progress – 14% (33) initially surged the prices but much warmer temps next week have tempered that rally! The Russian/Ukraine War has injected some premium but lately the mkt has numbed to that conflict! Covid eruptions in China’s largest cities are a demand concern! Rising interest rates & 40 year high inflation are an economic drag on the US & Global economies! A soaring US $ is problematical for US Exports! An inflated crude oil – holding over $100 bodes very well for ethanol demand! Six year low global carryover was NOT replenished by a very disappointing S/A crop! So many factors on both sides of the ledger have equated to a range-bound trade! But there is absolutely NO MARGIN FOR ERROR! Should the US follow S/A with “hot & dry” issues, then we’re way too cheap right now!!
Much like its sister markets – corn & wheat – July Beans has been confined to a rather broad trading range (1560 – 1740) as planting pressure & an estimated 4 million additional acres to be planted have curbed recent rally attempts – but robust Chinese demand has underpinned the breaks! Nonetheless, consolidation just a few dollars below the all-time high is a very good thing & a price level producers would have given their eyeteeth in any of the last 5-7 years! Going forward, there are several extenuating circumstances impacting the mkt which are quite uncommon and will play a large role in price direction – namely the Russian-Ukraine War, 40 year high inflation & the steady ratcheting up of interest rates to combat that inflation! However, this is one certainty – that if the weather turns hot & dry like it did in South America & given the backdrop of 5-6 year low carryover, record prices will happen!!
June Cattle – for the while – seems to be ignoring the best demand period of the year the current barbeque season – instead being victimized by negative Macros – namely the slowing of the US & Global economies due to raging inflation & ratcheting-higher interest rates! The two fundamentals seem to be offsetting one another – keeping the mkt range-bound some $10 off its Feb highs ($131 – 138)!
June Hogs have scored new lows today as the mkt has no friends anywhere! Domestically, demand has been muted by a slowing economy bogged down by high inflation & rising interest rates! The DJI is down over 500 points – trading nearly 5000 points of its Jan highs 7 crude oil is down $6.00! The export picture isn’t much more sanguine as China is buying just a small % of our pork – versus a year ago as they have re-built their herds! This leaves the contract over $26 off its late March highs! Eventually, the sheer cheapness of the product will attract enough demand for a turn-around but there is no technical confirmation of that yet!Questions? Ask Bill Moore today at 312-264-4337