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
India has banned wheat exports effective today & this action has sent the wht complex sharply higher! Chicago & KC Wht are currently limit-bid – up 70 cents & Minneapolis Wht is up 57 cents! However, India has flip-flopped in the past – first announcing a ban – then rescinding it! But this move simply adds another feather to a “bullish hat”! Wheat exports are up already due to the Russ-Ukr War – production is down globally due to drought & carryover came into this year on 6 yr lows! So even though wht is already at lofty heights at $12.50, this price may not be high enough to fit the current supply/demand balance sheet – especially if the US production comes in below average – a likely scenario given the pltg delays!!
Although Corn has very friendly supply/demand fundamentals in its own right, today’s corn strength is strictly a spillover from the limit-up wht – as the two commodities compete against one another in the feed grain mkt! Corn’s immediate concern is getting planted in a timely fashion – which so far hasn’t happened! Last week, only 22% (avg – 52) was in with alarmingly glacial progress in Illinois 15% (avg – 62) & Iowa 14% (avg – 61)! Todays #’s promise marked improvement but probably still not up to the average! Conventional wisdom says “yield drag” occurs after Mid-May! Corn’s S & D are very positive & stand-alone – even at the near-record $8.00 level! 3-4 million less acres, robust exports & 6 yr low stocks are a recipe for higher prices – even from here! Continued planting delays will only exacerbate the production potential!!
In stark contrast to corn & wheat, Beans have turned in a rather lackluster performance today with 7 cent gains – paling in comparison to Whts 70 cent & Corns 25 cent gains! But with good reason! The albatross for beans is a burdensome acreage increase this year as producers switch from corn due to crazy-high fertilizer costs! Still, $16.50 July Beans is nothing to sneeze at! And remember, “a rising tide floats all boats”! Wht & corn won’t escalate in value without beans tagging along! It’s easy to be intimidated by the near-record prices! Are the grains justified in moving higher from the current lofty levels! To be sure, they are should the Northern Hemisphere experience the same weather issues that plagued South America!!
It’s definitely a conundrum that cattle futures are languishing some $10 off their Feb highs – smack dab in the middle of the outdoor grilling season – arguably the best “demand” period of the year! But the “headwinds” are significant – namely the slowing US economy – bogged down with 40 year high inflation & ratcheting-higher interest rates to combat it – resulting in sluggish demand! Higher weights are also adding to the bearish forces! So the two conflicting fundamentals are resulting in a sideways pattern – as evidenced by the above chart!!!
Enough is enough! To quote the old commodity axiom, “low prices cure low prices”! So after a $30 drop in June Hogs (128-98), the sheer lower price has been enough to attract some demand – despite sharply reduced China imports & a lethargic US economy! Which in turn has resulted in a nearly vertical $ 7.00 upside correction! Whether this is simply a short-term adjustment or a complete mkt reversal depends on how our economy responds in coming months to continued interest rate increases!!Questions? Ask Bill Moore today at 312-264-4337