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
AgMaster Report 03/07/2023
May Beans continue to be the beneficiary of the intensifying Argentine drought with the latest estimates of 30-32 MMT (1st est – 48)! The USDA will update their #’s on Wednesday 3-8-23 & the anticipation of some low-ball estimates – possibly under 30 MMT- has rallied the mkt – even with weakness in its sister mkts – May Wht & Corn! As well, the renewal of the Russian-Ukraine Grain Corridor Deal– due to expire on 3/18/23 -seems to be hanging in the balance – with Turkey very interested in renewing but Russia dragging their feet! So, despite a record crop in Brazil, May Beans are hovering just under their 6-month highs of $15.50 – quite remarkable & due in large part to carry-out on 6 year lows globally!
May Corn seems to be caught in the middle – with the very bearish May Wht pulling it down & the bullish May Beans pulling it up! Today, was a good example with beans up double digits & Wht down double digits & Corn in the middle down 3 cents! This morning 2 flash sales of 182,000mt to Unknown & 110,000mt to Japan helped underpin the mkt! Technically, the mkt broke thru 6-month support at 640 but has not really followed thru on the downside – congesting around the 640 mark! The mkt is anxiously awaiting the Wed USDA Monthly S & D Report at 11am – particularly focusing on the Argentine corn & beans as drought continues to ravage their crops! Since early Feb the US Dollar has rallied 500 points but this has been offset by a $7.00 rally in the crude oil! Also, all eyes on the Fed as they continue to battle inflation by ratcheting up interest rates – albeit by only ¼ % last month! and the trade will be closely monitoring the 3/31/23 Planting Intentions & Qtly Stks – 3/31/23!
Since Mid-Feb, May Wht has plummeted $1.00 (8.00-7.00) – mostly off the inundation of cheap Russian Wht onto the world mkt – enabled by their record crop & their need to help finance the Russian-Ukraine War! But as we enter a new growing season for the US wht & with the uncertainty surrounding the renewal of the Corridor Grain Pact, many mkt observers are saying “enough is enough”! Especially with two major USDA reports upcoming – the MARCH WADSE on Wed & the planting intentions on Friday Mar 31! The mkt is extremely oversold & caution should be used entering new short positions in front of the reports & possible Corridor Renewal Deal!
Apl cattle scored contract highs yesterday – as the mkt continues to be bolstered by tightening supply (beef production down 6.3% from 2022) & average weights well below normal – which implies producers are very current! As well, boxed beef cut-out was up $.88 Tues – the highest in over a year! Seasonal Demand will start kicking in soon – the Stalwart supply/demand fundamentals suggest a possible run to all-time highs!
The technicals are quite obviously bearish with a spike low registered in early Feb but no new lows since! The unexpected 4th-1st Qtr surge in production (the first since 1985) has burdened the pork complex with heavy supplies that lackluster demand has been unable to eat thru! However, there are indications the mkt is trying to forge a bottom! First, the futures continue to hold a higher-than-normal premium to cash & second, the USDA pork cut-out reached its highest level since Dec 30. So maybe, the big supply is slowly being discounted by the current price – and the improving Spring Seasonal Demand could help whittle down the burdensome stocks! Plus, for the cost-conscious consumer, the cheap pork chops look very attractive next to expensive steaks in the grocery store!Questions? Ask Bill Moore today at 312-264-4337