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
Volatility reigns supreme in the past 10 trading days as clearly evidenced by the attached chart! First a nearly vertical $2.00 up-move (12.90 to 14.90) – spawned by hot & dry and a seeming failure of the Ukraine Grain Corridor pact – then a $1.00 freefall (14.90 – 13.90) as the weather moderated & the Grain Pact got some traction with one corn ship headed to Lebanon! The moves were exacerbated by the August time frame – which is when beans set their pods! Europe is still in the throes of a severe drought which has already reduced their production by 10%! Further geopolitical intrigue was introduced today – as Nancy Pelosi recently landed in Taiwan which may jeopardize US/China trade! But the crop is not yet made!
Dec Corn has had similar volatility – rallying 75 cents – then breaking 40! It has not been as weather-sensitive as it had already pollinated in July! But it is more effected by the topsy-turvy Ukraine Grain Accord as the renewed shipments involve mostly corn & wheat! So one shipment of corn (26,000 MT to Lebanon) has already gone with still 16 million MT to go! The logistics of subsequent shipments is complicated with insurance & risk tolerance still to be established! In other words, normalcy in Ukraine grain shipments is a long way off! And the European “hot & dry” issues persist! From my daily contact with producers, the crop appears to be “good but not great” – and definitely not enough to refill 6-year low pipelines! When the Pelosi geopolitics blows over, there is still a lot of water to pass under the bridge between now & harvest – both in the Us & Europe! Plus, the corn production started “behind the eight ball” with 3-3.5 million less acres!
Dec Wht has been more or less coat-tailing corn & beans as the latter two are in their critical maturation stage & wht most likely has already put in harvest lows! However, the good-to-excellent crop ratings for Spring Wht went up 2% (68 – 70) & wht – like corn – has been pressured by the resumption of grain shipments out of the Ukraine! After the $5.00 plummet since mid-May (1280 – 780), we feel “enough is enough” and that the current lows will hold with wht following corn & beans lead!!
Oct Cat has drafted Oct Hogs on the upside – primarily because consumers have favored lower-priced pork over beef in recent weeks – as record high inflation & gas has put the crimp om consumer budgets! A certain liquidation has occurred in the beef population due to heat-related death loss & dry pastures but has been offset by the stellar barbeque demand season thru Labor Day! But if the upside run by Oct Hogs runs out of gas, so will that of Oct Cat!!
Oct Hogs have made a solid upside run since late June – rallying $10 (87-97)`- feeding off the relative cheapness of pork products & the stellar seasonal demand derived from the “barbeque season”! But as we approach Labor Day, the chart action suggests the mkt may have run out of gas – as it approached the March highs of 100.82! But with gas prices coming down, the consumer appetite for meat could be enhanced into early Sept! Also, foreign demand for our pork products has been impressive!!Questions? Ask Bill Moore today at 312-264-4337