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
The mkt is hanging on every headline since the infamous TRUMP TWEET on Nov 1 – suggesting a possible trade war resolution was at hand! This week, Thur news came out that that a Chinese letter had been sent to the US, then early Friday, the mkt seemed unimpressed but then mid-day more positive rhetoric – enabling Jan Beans highest close so far for Nov!
FACTORS IMPACTING THE MKT
- EXPORTS – all USDA info was delayed a day due to the mkt’s observance Of Veterans Day this past Monday – Tues Inspections were 1,301 (900 – 1.3) & Fri sales were 470,000 (400 – 700)
Tues – 276,732 – Unk
Wed – 148,000 – Unk
Fri – 100,000 – Unk
- HARVEST PROGRESS – Beans are 88% in (lw – 89, avg – 93)
Ill – 94 (96) Ind – 91(92) Iowa – 94(97)
- NOV 8 USDA REPORT – was a funky one with lower production/yield #’s – Giving way to higher carry-out – leading to a volatile day but ultimately a higher close – there is no report in Dec – Final #’s in Jan!
Production – 4,600 (exp – 4676 Oct -4690)
Yield 52.1 (exp – 53.0 Oct – 53.1)
US Carryout 955 (exp – 900 Oct – 885)
Global 112 (exp -110 Oct – 110)
- TRADE RHETORIC – the mkt is ultra-sensitive to any “trade talk” as evidenced by this week’s roller-coaster action – detractors are pessimistic saying no concrete measures have been announced – supporters are more upbeat – saying that any continuing “trade talk” is a good thing & could lead to a resolution before year’s end
- MACRO MKTS – the “outsides” have certainly been no friend to the grain complex this past Fall – with the US Dollar gaining 5% & crude losing a whopping 30%! But impressively the grains have not posted new lows – remaining range-bound
The TWEET HEARD THRUOUT THE GRAIN WORLD on 11/1 was viewed with skepticism as past mentions of progress on the trade war had not panned out! But this time around may be different – as the positive rhetoric seems to have traction! Indeed, to date, the 50 cent rally spawned by the Trump Tweet has been sustained – even as Crude Oil Went into a “free fall”! So far, the market seems to be buying it!!
Indeed, Dec Corn had a disappointing week closing about a nickel lower while Jan Beans gained 6 cents & Dec Wht was up 5 cents! The mkt settled into the lower half of its 6-wk range (360-378) despite waning harvest pressure, robust exports, lower yield reports and tight producer holding. The culprits may well be the “outside mkts” as the US Dollar recently made new highs for the year & the crude oil just completed a 30% plummet culminated by a $4.00 single day drop last Tues!
FACTORS IMPACTING THE MKT
- EXPORTS – Tues Inspections were 1,136 (800 – 1,200) & Fri Sales Were 893,000 (500 – 900)
Wed – 212,000 to Mexico
- HARVEST PROGRESS – Corn is 84% in (lw – 76 avg – 87)
Ill – 96 (93) Ind – 88 (86) Iowa – 83(88)
- NOV CROP REPORT – was a real conundrum as the Chinese rebalanced Their stocks leading to an almost doubling of global carry-out- and its Negative impact may still be felt in the corn mkt
Production – 14,626 (exp – 14771 Oct- 14,778)
Yield 178.9 (exp – 180.0 Oct – 180.7)
US Stocks 1736 (exp – 1781 Oct -1813)
Global 307 (exp – 158 Oct – 159)
- FARMER SELLING – at current price levels, you wouldn’t expect much – Except as is necessary to pay bills – it will take mkt rallies to extract Grain from producer’s hands
It’s an enigma that Dec Corn hasn’t performed better of late –when many felt – going into harvest – that it had the best fundamentals! However, the Nov USDA Report certainly didn’t help – nor did Crude Oil’s recent collapse! However, as US Corn is the cheapest in the world – a fact not lost on our trading partners – we fell EXPORTS will lift this mkt Into the Spring!!
Dec wht has stubbornly remained range-bound (500-520) in the past 3 weeks As fundamentals both here & abroad have effectively offset each other!
- Global production has taken a hit – Australian production has declined Wet weather has hurt Argentina’s crop – US planting delays in Kansas Foretell lower production
- Russia keeps exporting at a feverish pace but for how long
- Corn & Bean harvest are pretty well wrapped up – alleviating the harvest pressure
Dec Cat reminds me of The Chicago Bears Defense – BEND BUT DON’T BREAK! Hefty short-term supply has pushed this mkt over $5.00 off its highs – albeit in a begrudging Fashion! Seasonal demand has favored turkey & hams – adding to the downward pressure! But coming to the rescue is overall STRONG DEMAND! Also the lingering Asian Swine Fever- (ASF) is potentially a major bullish factor going into 2019 – Dec Hogs were sure impressed with it on Friday – enough so to turn in a limit-up performance! So there’s enough friendly fundamentals around to turn this mkt – so despite burdensome, Dec Cat had a positive week – Gaining $.80!
Bullishness abounds for the Hog Complex this week! First would be the seasonal demand that Thanksgiving brings – as hams are in robust demand! Second would be the discount that futures still holds to cash! And third, clearly the 800 pound gorilla in the room, is the ever-broadening spread of Asian Swine Flu in China! Remember, the disease is very contagious & there is no known cure – the impact in 2019 could be prodigious! So, all these factors combined to drive Dec Hogs limit-up on Friday!
Questions? Ask Bill Moore today at 312-264-4337