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 05/01/2023
Two cancellations from China – 327,000 MT on Mon & 233,000 MT on Thurs sparked massive sell-off in Corn futures (610 – 570) – as fears mounted there would be more to follow! There weren’t so far but that negative coupled with excellent planting progress with favorable weather ahead this week – were all the catalysts the mkt needed to plummet! Just a few weeks ago, China was buying from us nearly daily but now they are “reversing”! The culprit seems to be the flooding of the world mkt with cheap South American corn – which removes the US Export incentive! The mkt is also nervous about the Fed’s IR increase on Wed (.25%) & the final outcome of the Corridor Deal! But it’s way too early for an obituary!
July Beans was not immune to the downward pressure generated by the Chinese Corn Export Cancellations -which was additionally exacerbated by planting pressure – as the early planting is off to an excellent start! In the past 10 days, the contract has lost a dollar (15.00 – 14.00)! Still $14.00 is quite a good price for this time of the year – and is holding due to a brutal Argentine drought which nearly halved the crop from 2022 & the historically low carry-out – at 6-7 year lows! The mkt eagerly awaits the Fed’s IR increase this Wednesday – as well as the May WASDE – due out next Friday 5-12-23! The bottom line is we absolutely NEED a good US crop to refill the global pipelines – and any serious weather scares will rally the CBOT this summer!
Rain in the plains, slack exports & bearish pressure from corn & beans have kept July Wht under wraps last week! The Ukraine Corridor Deal seems to be faltering with an expiration date of 5-18-23! The Russians are complaining about the restrictions of the deal! However, the mkt hasn’t been responding in a positive way as you’d expect – being more swayed by the drought-easing rains in the Central Plains! The mkt needs a bullish impetus to move up from the low $6.00 area – either from exports or continuing dry weather!
June Cat has been on a remarkable “Bull Run” rallying over $20 since early 2022 – fed mostly by short supply concerns! It’s currently sustaining that rally off a very strong beef mkt – with boxed beef cutout reaching the highest level since September 2021! Additionally, the huge discount June Futures holds to cash continues to underpin the mkt! Finally, the grilling season – now underway – is the best demand period of the year & will continue to supply a fresh infusion of consumer spending!
After many “false starts”, June Hogs finally seems to have carved out a low on 4/18-20! A combination of a tightening outlook for supply, an improved export outlook, stronger pork prices & fresh demand from the grilling season – have all combined to finally crater the mkt! We’ve had several incidences where we thought the mkt had bottomed only to be disappointed! But the timing of this low – coinciding with the barbeque season – has convinced us this time is the “real deal”!Questions? Ask Bill Moore today at 312-264-4337