Commodity Futures Trading

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Agriculture Master Report
By: Bill Moore | January 24, 2023

MAR BEANS



Widely forecast Argentine rains actually happened over the W/E – forcing heavy fund liquidation of bean & meal positions – as the mkt quickly shredded its formidable “weather premium” off the biggest rain event in months! In addition, Brazil’s harvest of its record crop (150 MMT?) is going well! And finally, China is on holiday for a week due to its Lunar New Year Celebration! The trifecta turned out to comprise the perfect bearish storm! Still, exports have been growing more respectable of late – last Friday’s inspections were a solid 986,000 MT & todays export sales came in at an impressive 1.8 MMT – following last week’s 2.1 MMT! So, an export rebound seems to be underway!

MAR CORN



Much like its sister mkt Beans, Corn is also undergoing a double-digit drubbing – as the best rains in 7 months have descended upon the drought-ravaged Argentine crops -coupled with China’s week-long holiday hiatus – both forcing sharply lower values! But, at the same time, also similar to beans, there exists optimism on the export front! Today inspections were 727,000 MMT & Friday’s sales were 1.2 MMT! The reason for the rebound is the plummeting US Dollar – which has recently rendered US Gulf Corn on a par with its S/A counterparts! As well, even though China is out of pocket this week, they are re-opening – after their Covid issues – which should bolster US exports! And the outsides are also lending support – the DJI has rallied 6000 points since last October despite “doom & gloom” recession forecasts & crude oil has rallied $12 since Mid-Dec bolstering ethanol demand!

MAR WHT



Rain brought wheat down yesterday – with moisture in the plains & Midwest helping the winter crop & rain in Argentina pulling down corn & beans – with spill-over pressure into the wht complex! Also, Russia’s record wht crop & abundance of cheap, exportable supplies has helped to keep a lid on wht prices! But today, Turnaround Tuesday has emerged in corn & beans off the promise of an improved export picture – and their strength is helping to buy wht prices! As well, the US Dollar continues its relentless slide – potentially helping wht’s export picture in the 1st Qtr!

FEB CAT



The clear upside leader in the meat complex is cattle – mostly fueled by a bullish supply scenario! The largest decline in production from the 4th Qtr to the 1st Qtr – at 375 million pounds (ly-84) – since Feb 2019 – coupled with decent demand – has underpinned this mkt since last Fall! Re-enforcing that shortfall was last Friday’s Cattle-on-Feed – which showed placements at 91% of last year! That has enabled Feb Cat to hover just $1.50 off its contract highs!

FEB HOGS



At the other end of the spectrum is Feb Hogs – who has no friends anywhere! Since late Dec, the Feb Hog contract has lost $15.00 (91.50-76.50) mostly due to supply woes & lackluster demand! Normally, pork production declines from the 4th Qtr to the 1st Qtr but this year, it’s expected to increase significantly! However, the mkt is currently egregiously oversold & sheer bargain-hunting could force a sharp correction!

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