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
Just when you thought it was safe! Last week, the USDA issued a rather friendly report that kept bean yields under 53 – then new tariff talks were announced with China but Monday, more tariffs were announced by Trump – leading to more down – but today –alas Beans are up 20 cents (at one point) – so maybe the mkt – at 10 year lows – is finally sold out!
FACTORS IMPACTING THE MKT
1) EXPORTS – Thur Sales were 917,000 MT (400-900) & Mon Inspections were 784,752 MT (926,3
17 Sept 241,000 Unk
13 Sept 108, 010 Mexico
13 Sept 120,000 Unk
10 Sept 132,000 Unk
2) CROP RATINGS – Harvest – 6% (3) Dropping Leaves – 53 (36)
3) USDA SEPT 12 CROP REPORT – until the Oct Report, these #’s are our “bible” – Yield – 52.8 Production – 4.693
4) TRADE RUMORS – it seems everyday there’s a headline driving the mkt –Last week, trade talks were resuming – then Mon-Tues tariffs on 200 Billion
On back on – and now S/A is buying our beans after selling their beans to China. The $64 question is “when is enough – enough”! I say 10 year lows are!
Today’s action – up 24 cents – for no reason really – may be a testimonial to that!
Exports got the mkt’s attention this morning taking focus off the USDA’s Highball 181.3 yield estimate & escalating Trump Tariffs. An 8am announcement of 150,000 to Mexico & the 7:30am Export Sales of 1.383 MMT impressed the mkt –that was already grossly oversold. The result was a near-vertical 12 cent rally that had the mkt up 10 cents earlier in the day! And already some variability in yield estimates have some mkt pundits. Predicting the Oct #’s from the USDA will not be as sanguine as they were in September!
FACTORS IMPACTING THE MKT
1) EXPORTS – Thur Sales were 1.383 MMT (500-1.200) & Monday Inspections were 1,030,267 MMT
20 Sept 148,950 Mexico
13 Sept 142,876 Costa Rica
11 Sept 138,000 South Korea
5 Sept 101, 736 Mexico
2) CROP RATINGS – Harvest 9% (6) Ill -12 (5) Ind – 7(4) Iowa 2 (1) Dented – 93 (86) Mature – 54 (36)
3)US SEPT CROP REPORT- recent yield reports have indicated a lot of variability in corn yields – which have some thinking the Oct Report may ratchet down the yields & production – but for now, we have to go with the Sept #’s
Yield – 181.3 Production – 14,827,000
4) HARVEST DELAYS – sporadic rain thru the corn belt has kept some out of the fields – the delays aren’t super long but may be enough to take the top-end out of the yields
5) US DOLLAR – possibly overlooked in all the talk about tariffs & record yields is the stunning $3.00 descent of the US Dollar since Mid-Aug – potentially very advantageous for our grain exports
Yesterday, pretty much out of the blue, beans jumped 25 cents & corn was up 10 cents – that’s pretty good action amidst all the bearishness of tariffs & record yields! We could be sold out! We’ll look for upside follow-thru to confirm!!
After a long slide down since early August, Dec Wht seems to have “caught” late last week – with a 30 cent rally (495-525)! The mkt had been pressured by tariffs, projected record corn & bean yields & a bearish Sept USDA Report – but production issues in Canada, Australia & Russia have made a dent in global supplies. Plus, weekly Egyptian purchases have highlighted still-solid DEMAND! And $5.00 is a psychological area of support. Should early harvest C & B lows already be in, then wht may have bottomed – as well!
Consistent, nagging reports of big increases in beef production from the 3rd to 4th quarter – plus a healthy premium to cash – made last Friday’s limit-up move highly improbable – but it happened – as cash rose sharply & the futures followed. Supply losses from Hurricane Florence & the Asian Swine Flu helped underpin the mkt – as well as expectations the US would be a major exporter of beef ahead! Today at 2pm, the September Cattle-on-Feed Report comes out with both on-feed & placed-on-feed #’s expected to be 4-5% higher!
It looks like a $3.50 weekly gain for Oct Hogs – which in some ways – is as improbable as Oct Cat going limit-up last Friday! First, Dec Hogs hold a 456 point premium to cash – when the 5 yr average shows a discount of 1000 points! Second, 4th Qtr production is expected to increase 6.3% higher than last year’s record! But the formidable “wild cards” are the Asian Swine Flu Epidemic in Europe & Asia & the potential fall-out from Hurricane Florence!
Questions? Ask Bill Moore today at 312-264-4337