AgMaster Report 02/08/2023

MAR BEANS

A Chinese surveillance balloon was shot down over the Atlantic on Saturday heightening trade friction between China & the US – forcing the CBT commodities to retreat today – as issues are sorted out! Of course, we’ve had a history of trade problems with China most recently over Taiwan. State Dept Secretary Blinken cancelled his trip to China this week! In addition, Brazil’s record bean crop is 10% in with high yields so far reported! And rain is forecast for the drought-ravaged Argentina this W/E! However, Monday inspections were solid again at 1.8 MMT (lw – 1.9) & the mkt very impressively is congesting over the $15.00 mark regardless of the many negatives! Historically, a very high price for now!

 

MAR CORN

Despite pressure in beans & wheat, Mar Corn is only marginally lower today – maintaining its recent 20 cent trading-range (670-690) – which it has inhabited for the past 3 weeks!  Helping to support today were two flash sales at 8am – 200,00 MT to Mexico & 111,800 MT to Japan! These further corroborate an “export story” which promises a much better export scenario into the 1^st Qtr of 2023 – due to the plummeting dollar & the re-opening of China!  The gulf price of US corn is at parity with Brazil & Arg prices as well! The ongoing drought in Argentina seems to support the mkt on breaks! With all the negativity in the past 6 months – a looming US recession, a record Brazilian crop & the opening of the Russian-Ukraine grain corridor, the mkt’s ability to hover just under $7.00 – an historically elevated price – is garnering a lot of attention among grain traders & producers!

 

MAR WHT

Since the beginning of the year, Mar Wht has been confined to a 75 cent range (720-795) – supported by smaller crops in Russia & Ukraine and continued drought conditions in the central US but pressured by Russia’s relentless assault on the global wht mkt – continuing to inundate the mkt with very cheap exports – a luxury they can well afford after their recent record harvest! But a quick gander at the above bar chart shows the wht mkt a whopping $5.00 off its May highs! With any kind of export improvement & possible rally in its sister mkts, the current price should be cheap enough for the S/D fundamentals!

 

APL CAT

Every time, you look at the livestock complex, you have to rub your eyes! The disparity is mind-blowing.   On one hand, you have cattle – a stalwart supply Bull that keep chugging along -being the beneficiary of a sharp reduction in production from the 4^th to the 1^st Qtr! Also, average weights have been lower & the recent Cattle Inventory Report showed #’s down 3-4%! On the other hand, is the bottomless pit that is the hog mkt – the polar opposite of the cattle – making new contract lows most every day – languishing under the weight of too much production – with 4^th to 1^st Qtr Production going way up! In addition, demand for hogs is lackluster, feed costs are high & the premium of Apl Hogs to cash is $7-8 higher than the average!  You’d think, eventually the consumer would opt for cheap pork chops over expensive steak? Maybe, the worm is finally turning! Today, for instance, Apl cat are down $.90 & Apl Hogs are up $.50!

 

APL HOGS

The Apl Hogs are egregiously oversold & recently displaying extreme volatility often linked with a market turn-around! After rallying $4.00 last week, the mkt gave all that back in one day on Mon! Then, today the mkt is back up $.50! The brutal supply/demand fundamentals have been well-chronicled – over-production, meager demand & a too-high premium to cash by Apl Hogs! And the bargain-hunters have swooped in – saying “enough is enough” – thinking the consumer will finally opt for the lower-priced meat source!

Questions? Ask Bill Moore today at 312-264-4337