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AgMaster Report 10/26/17


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Written 10/26/17

NOV SOYBEANS

Sterling exports have been doing battle with the harvest pressure of the US’s biggest ever bean crop (4.4 – 4.5 BB) – which has produced a sideways trade since mid-Aug – albeit with an upward bias!  With the harvest almost ¾ done, the “old wives tale” says the lows are in!  Exports will definitely outlast the harvest pressure!

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FACTORS IMPACTING THE MKT

  • EXPORTS – Mon Inspections were 2.5 MMT (1.3-1.9) – Thur sales Were 1.284 MMT (1.0-1.8)

10/29 –      198,000 MT         China

10/19 –      384,000 MT         China

10/16 –      227,300 MT         Unk

  • UDA’S CURRENT PRODUCTION ESTIMATES – based on the 10-12 Crop Report

Prod-   4.431 BB    (4.321-4.480)

Yield –  49.5 B/A    (48.5 – 50.2)

  • HARVEST PROGRESS – Beans are 70% in (LW-49, AVG – 73)

Ill – 77(73)    Ind – 69(67)   Iowa –   61(81)

  • TECHNICAL BREAK-OUT OFF 10/12 USDA REPORT?

Nov Beans managed a $10.00 close on Fri 10/13 on the heels of the USDA’s 10/12 report – a promising sign until “harvest pressure” reared its ugly head The following week – forcing a 25 cent correction in Nov Beans! Still the Mkt is hovering in the upper end of its range (950 – 1000) since Labor Day

  • RANGE-BOUND – since 9/1/17, various offsetting fundamentals have kept Nov Beans in a range (950-1000)- including harvest pressure, exports, South American planting weather & the US Dollar – however, the biggest “bear factor” – harvest pressure – is rapidly waning

With the crop almost 2/3 in, the Mid-Aug lows of $920 are in effect – HARVEST LOWS!  The mkt has witnessed higher highs & higher lows since then!

CORN

Whereas Nov Beans have been locked in a range with an upward bias, Dec Corn is in a pure sideways pattern since 9/1 (345-360)!  Exports support & harvest keeps a lid on!  The last two trading days epitomizes the “ebb & flow” of the range.  Last Fri, Dec Corn was “down & dirty” closing at 345 – its lowest of the season – then today, the mkt rebounded with a 6 ½ higher day – back into the middle of the range!

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FACTORS IMPACTING THE MKT

  • EXPORTS- Mon Inspections were 2.5 MMT (1.3-1.9) –Thur sales Were 1.284 MMT (1.0-1.8)

Oct 20 –        120,000 MT          Spain

125,000 MT          Unk

Oct 12           120,000 MT         Mexico

  • LATEST USDA ESTIMATES (10-12)

Prod  –           14,280 BB  (LY – 15,148)

Yield –            171.8  B/A (LY –  174.6)

  • HARVEST PRESSURE – % IN  38 (lw – 28   avg -59)

Ill – 62 (74)    Ind –  46 (59)    Iowa 23 (55)

  • SOUTH AMERICA – was too dry up North & too wet in the South – Delaying planting
  • CHEAP ENOUGH? Yes, the 3rd biggest crop ever – but the mkt has been Trading on that for several months & the 10 year low price level may Have factored in the 14-14.2 BB estimates

Would you rather sell a 10-year low or buy it? Isn’t it always “darkest before the dawn”?  Shouldn’t exports outlast the harvest pressure?

DEC WHEAT

Much like its sister mkts, Nov Beans & Dec Corn, Dec Wht continues to labor in a sideways trading pattern since Labor Day (425-460).  Dealing with not only record global stocks of its own, it is also taking on a record bean crop & the 3rd biggest corn crop ever! The mkt needs a bullish impetus such as strong exports & a weaker dollar!

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DEC CATTLE

After running up over $12 (107-119) since Mid-Aug, Dec Cat was certainly ripe for a healthy correction – especially considering its premium structure & the big production increases predicted for the 3rd-4th Qtr!  So, when we received a bearish Cattle-on-Feed Report last Friday 10/13 – followed by a negative Cold Storage yesterday, we thought for sure the mkt was headed SOUTH!  But alas, demand & strong cash mkt prevailed – the mkt eschewed the reports & today is only $.50 off its Oct highs!

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DEC HOGS

Much like its sister mkt Dec Cat, Dec Hogs has experienced a sharp upturn since late Sept (56-65) as solid demand & a strong cash have propelled the mkt into a premium position as well as an overbought status.  So, this contract, as well, was prime for a sharp correction & indeed we saw one off the two negative meat reports!  The difference was the demand factor as Pork imports were down 38% from last year!  But today Dec Hog recovered after a $2.50 correction off the top!

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Questions? Ask Bill Moore today at 312-264-4337

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About the author


Mr. Moore’s commodity career unwittingly began when he was 5 years old, spending his summers working for his family farm near Quincy, IL.

Bill attended Cornell University, graduating with a degree in Civil Engineering and then studied at the University of Chicago for his MBA. Soon after graduation, he entered into the United States Marine Corps.

In 1975, Bill began working at the Chicago Mercantile Exchange as an Agricultural Specialist – trading corn, beans, wheat, cattle & hogs. In 2000, he moved to the Chicago Board of Trade to work for a futures brokerage firm. Then, in early 2011, he brought his business to The PRICE Futures Group where he deals exclusively with 1000 acre grain farmers, helping them to design their seasonal corn and bean hedging programs.

Contact William Moore: (800) 769-7021 or at wmoore@pricegroup.com

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