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
The Sept WASDE on 9/12/22 was a bullish surprise lowering the yield by 1.5 bpa – forging a temporary top in Nov Beans at 1509! Since then, Macro winds have blown hard – with 40-year high inflation forcing the Fed to ratchet up interest rates – forcing a 20% drop in the stock mkt & a 20 year high dollar stubbornly going up every day! Both have muted grain demand! As well, harvest pressure is starting to seep into prices with beans 8% in! The silver lining is Russia’s escalating the war – which jeopardizes the grain corridor deal – which is bullish to grain prices. Finally, Brazil is on tap to plant a record crop! But bottom line, stocks are still tight – if S/A falters & demand improves, prices are too low right now!
Much like Beans, corn while boasting a tight supply/demand balance sheet is dealing with the negative outside markets – particularly the US $! Today’s mkt action is a prime example -early on the dollar was down 75 points lower & corn was up 12 cents – but mid-session, the $$ rallied 100 points – shaving the corn gains to only a couple of cents! Of course, a strong $$ makes our exports that much more expensive – thus discouraging them! Also, China’s buying of our corn has slowed considerably in 2022 as they are confined by their zero tolerance Covid policy! A bright spot for the corn may happen Friday at 11am when the USDA issues their Quarterly Stocks Report – which is expected to be friendly! There is bound to be plenty of evening up before Friday – which also is the last day of the week, month & quarter! Finally, harvest pressure is beginning to impact prices! As of Monday, corn is 12% in! So, indeed, corn is a SUPPLY BULL taking on a DEMAND BEAR!!
Dec Wht has been the beneficiary of Russian President Putin’s recent escalation of the Russ/Ukr War by activating 300,000 reservists, conducting sham referendums & making nuclear War threats – rallying 31 cents today while its corn & bean neighbors are only up single digit gains! It’s hard to imagine the Ukraine Grain Corridor Deal being renewed at the end of November amidst the current environment! However, with the USDA issuing their Quarterly Grains Stocks Report Friday at 11am, this rally may soon morph into a evening up, sideways pattern as the trade eagerly awaits an ending stocks update! Also, accelerating harvest looms over the grains!
Wow! Didn’t see that coming! A $13 plummet in just 6 trading days! The collapse was ignited by several factors – first, ideas that slaughter was running seasonally high & second fears that a global recession would severely destruct demand! However, as often happens, the break was way overdone as Dec Hogs now are at a $21.00 discount to cash when the average is only $2.75! And with the Quarterly Pig Crop out Thur at 2pm, we would suspect some evening up is in store! Estimates have Sept 1 All Hogs & Pigs – 99.2%, kept for Breeding – 99.6% & Kept for Marketing – 99.1%!
The Bearish Macros have likewise forced a $6 drop in Dec Cat as well – the cattle aren’t as impacted by the drop-off in China buying as are the hogs but the implication of a “global demand softening” as a result of a probable 2023 recession is still formidable! Even though the consumer has more bucks in his pocket as a result of the sharp fall-off in gas prices, a weak demand period seems imminent! Plus, the recent Cattle-on-Feed Report had a bearish tilt! The big premiums to cash, however, are now out of the price structure!Questions? Ask Bill Moore today at 312-264-4337