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
A picture is worth 1000 words! And indeed, the above chart speaks volumes to the fact that “harvest lows are in”! And why not? Bean harvest is 90% in, the US Dollar plummeted last week making US exports much more attractive, the Farmer is storing – not selling, South American planting is behind & the Fed said last week that there won’t be any more IR increases this year – which is very favorable to all commodities! Just this morning, there was a flash sale of beans to China & Monday inspections were over 2 MMT! Furthermore, the USDA Nov WASDE Report due out Thur at 11am is predicting 4.1 BB – UNDER 2022’s 4.28! Looking ahead, the extent of S/A pltg issues & exports will determine the rally’s length!
Corn’s issue the last half of 2023 has been one much more of “demand” than “supply”! Granted the 2023 crop is estimated at a whopping 15.07 BB – well above their 2022’S 13.70BB – a # much higher mostly due to a 3-4 million acre increase in planting! But this increase has been well-advertised for some time & appears to be dialed in! What’s of more import is the fact that US Gulf Corn is now the cheapest anywhere globally – which should lead to a sizeable increase in exports into 2024! Today, already a flash sale of 289,575 MT sale to Mexico was announced – with much more expected! And domestic ethanol demand has been quite strong all year! This coupled with South American planting issues & the fall-out from geopolitical issues in Europe & the Middle-East – should all energize a strong rally from current levels – with harvest pressure all but over!
Dec Wht – since early Oct – has been stuck in a 60 cent range (540-600) with not enough bullish news lately to rally wht from its extremely depressed price level! Potential rallying points would be Russia’s continued attacks on Ukraine ports, the likelihood the Middle-East conflict would spread, a 6 week-low in the US Dollar & a net short of over 100,000! These, a post-harvest rally in Corn & Beans & Chinese demand for US Wht should finally move wht out of its historically low trading range!
Not so fast you “Cattle Bears”! After the very negative 10-20-23 Cattle-On-Feed Report which reflected 6% more placements (1% exp), futures responded with a very decisive, very rare limit-down! But that was “all she wrote” on the downside – as the mkt stabilized & subsequently recouped all the report losses & then some – but currently struggled to extend those gains as creeping worry about sustaining demand at these record levels & the 6% increase in plcmts weighed heavy on the mkt! So the mkt is back in a “trading range” mode – still supported by tight supplies but not so much with strong demand like in the spring & Summer!
Just as the 10-20-23 Cattle-On-Feed was pivotal for the cattle complex, so was it so for the hogs as well – as the Hogs inability to follow cattle down on their limit-down day was very significant! That bullish divergence led to a seasonal low in Dec Hogs – followed by a impressive $8 rally (65.50 – 73.50)- back into the middle of its 6-month trading range! Further rallies will be hampered a weak cash mkt & higher 4th Qtr Production! However, the recent plummet in the US Dollar will help exports – partially offsetting that pressure!
Questions? Ask Bill Moore today at 312-264-4337