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
It was feared the negative November WASDE – 4.129 (4.104) & 49.9 (49.6) issued 11-9 would top the mkt out but it appears it only caused a “bump in the road”! After correcting 50 cents (high-to-low) off the report, the mkt recouped all those losses Friday & today off the N Brazilian drought (& too wet in the south) plus robust China buying of over 3 MMT of beans in the past week – to take Jan Beans back to their highs! The US Crop is in the rear view mirror whereas the potential production losses from South America are yet to be determined! But they could be substantial – should the hot/dry continue thru year’s end! As well, the macros are supportive with the US Dollar down 200 points & the DJI up 2000 points in the past 4-6 weeks! Cheaper exports & a strong economy are very good for the corn & beans!
As you can see, Dec Corn has muddled along for the past 10 weeks-not really benefitting from the hot & dry in Brazil! But the exports are starting to show up – as US Corn is the cheapest anywhere in the Globe – both the price of corn & the US Dollar have dropped sharply – really making US Corn competitive! And all along, domestic demand has been very strong! Even though Corn has played “second fiddle” to the bean mkt, better exports & bean “spill-over” could well rally corn substantially into 2024 – especially from the current depressed price level! We’re currently a whopping $1.50 off our Summer highs!
For over 3 months, Dec Wht has been stuck in a tight 35 cent trading range 470-505. It was thought that the Russian-Ukraine War would cause export disruptions out of both countries but so far it has not! Crop issues in Australia & Argentina have also lessened the exportable surplus from 36 mmt to 25 mmt – but so far not enough to impact prices! A sharp drop-off in cheap Russian exports, an increase in general exports & a post-harvest rally in corn/beans would all be probably needed to rally wht out of its current range!
It was like “waiting for the other shoe to drop” – trying to determine when the cattle’s much-anticipated top had finally been made! Well, we received our answer in resounding fashion in the past 2 weeks as Dec Cat plummeted $12.00 in just 7 trading days! Spearheading the collapse was a sharp decrease in demand as the consumer finally rejected the record-high price of beef – especially with so many cheaper alternatives available & also leaned away from beef & more towards pork/turkey offerings– so much more popular in the upcoming Thanksgiving/Christmas holiday period! Today, however, we witnessed an upside correction of severely oversold mkt!
Twice in the past month, Dec Hogs have resiliently display “bullish divergence” against sharply lower beef prices – both confirming a seasonal low in Dec Hogs – right after the bearish 10-20-23 COF Report & validating that low last Friday when cattle & feeders collapsed but hogs closed higher! In both instances, Dec Cat was $5-6.00 lower & Dec Hogs managed to close higher! FundamentallyQuestions? Ask Bill Moore today at 312-264-4337