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 03/14/2023
This morning, the mkt witnessed a classic confrontation between bearish Macro events & bullish fundamentals – which opened the mkt sharply lower but saw it rebound up & stabilize after President Bidens reassuring talk at 8am! After 2 California banks went under over the W/E, he assured the nation the Fed would support the depositors & that a mass financial contagion wouldn’t evolve! At the same time, Argentina’s drought worsened over the W/E – with crop estimates being ratcheted down – Beans 24-26 MMT (USDA – 33) & Corn 33-36 MMT (USDA – 40)! The combination of the big drop last week, the historic drought in Argentina, the cheapening US $ & a reopening China – bodes well for 2023 exports!
May Corn’s 65 cent drop (680-665) since mid-Feb has improved Corn’s competitiveness on the World Export Market -and that coupled with a US Dollar 1000 points off it Sept highs, the severe Argentine drought – now with losses exceeding the gains from the record Brazilian crop & finally the re-emergence of China on the World Export Mkt – all point to a very improved export picture going into our planting season! The global stocks are already on 6-7 year lows & and any production hiccup in the Northern Hemisphere will send prices back over $7.00!
Sometimes, a mkt “looks so bad, it’s good”! That would be the case with May Wht which has been battered down to 2-yr lows by a relentless flow of Cheap Russian wht – which has effectively put a cap on recent rallies! So, from an extreme, oversold position with a large, short open interest, the mkt is susceptible – at any time – to sharp short-covering rallies – due to any production issues worldwide such as the possible heat wave in India or the failure of the Russia-Ukraine Corridor Deal to be renewed! The inability of the mkt to make new lows this morning off the bank closures demonstrates solid “bullish divergence”!
After congesting for 6 weeks in a tight range (163.50 – 166.50), Apl Cat dropped to new 6-wk lows at 162.50 – although, it closed just off its daily highs! The downside impetus was provided by the macro sector -as two California banks closed over the W/E – creating some financial chaos yesterday! The DJI has since stabilized as President Biden gave a 8am news conference Mon– reassuring depositors! The cattle mkt continues to be a supply bull as beef production last week was down 5.2% from a year ago – and weight remain low enough to keep producers current. But slow exports, a sluggish beef mkt & some technical damage have traders on alert as to a possible top in the mkt! But we feel, it’s just a correction with supplies very tight & the Spring Barbeque Demand just around the corner! The USDA will provide further info this Friday at 2pm with their March Cattle-On-Feed Report!
April Hogs had a solid 4-day $4.00 rally rudely interrupted by two California bank closures over the W/E sending financial mkts into a tailspin – and creating a general risk-off environment for all commodities! So, the mkt has relinquished one-half of that rally! Still, they are promising signs the mkt scored a spike-low back in Feb as the massive supply is being priced in & the mkt’s much-higher-than-normal premium to cash of $6.29 is very encouraging! We feel the coming Spring Demand will rally this mkt out of its recent consolidation pattern!Questions? Ask Bill Moore today at 312-264-4337