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
Mar Beans got a big boost today off the news Phillips 66 was authorized to operate a renewal diesel plant using 50,000 barrels – the news rallied bean oil over 100 points – which in turn lifted the contract 11 cents! On 1-12-24, the USDA issued a bearish WASDE REPORT – but since then, the mkt has stabilized & even reversed higher – indicating there are still real concerns about Brazil Bean Crop – now estimated at 135-150 MMT! As well, the fund short open interest is approaching record levels & prices are cheap enough to attract substantial export interest! Coming into the season, stocks were already tight & that didn’t improve with a 2023 crop about the same as 2022! And the DJI is at record levels -good for all markets.
Much like its sister mkt, Mar Beans, Mar Corn has stabilized since the issuance of the Jan WASDE Report -indicating much of the report was already dialed into the price level! Also, there is a plus 200,000 short open interest in corn – which could produce massive short-covering on any “bullish spark” in the mkt! As well, US Corn is the cheapest anywhere on the globe – which sets the stage for a dramatic improvement in exports! Finally, the Fed has announced 2-3 interest cuts in 2024 – which would further devalue the US Dollar – which makes our already cheap corn – even cheaper! On the MACRO FRONT, a record DJI – despite continuous interest rate increases – establishes a comfortable environ for all ag mkts!
The technical picture for Mar Wht improved considerably last week – aided by positive exports & increasing tension in the Middle-East – as well as spillover support from corn & beans! But headwinds still exist as moisture levels have improved in the Western Plains. Also, Egypt tendered for Russian wht last week which gave a general boost to the mkt!
Capping off the impressive $12 rally (163-175) in Feb Cat since mid-Dec was the 7 day Polar Vortex – which slowed weight gain & increased death loss! Also, the anticipation of an expected bullish Cattle-on-Feed Report issued last Friday at 2pm added to the rally! Then the old buy-the-rumor-sell-the-fact impacted the rally as the cold snap is over & the COF came out friendly but as expected with 5% fewer placed & 2% more on-feed! The result was a solid correction today – as the mkt awaits improving demand news thru late January!
Much like cattle, the bitter cold snap seemed to top out the hogs recent $8 rally (65-73) – as slaughter levels & production ramp up to pre-Vortex levels! Demand is just OK after peaking the recent holiday period! Still it’s only January, and there is undoubtedly much more snow & cold to come – which will underpin the mkt for a while! Domestic demand however is having trouble picking up the slack from lost China import demand – as China has liquidated heavily in the past month!Questions? Ask Bill Moore today at 312-264-4337