Commodity Futures Trading

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Agriculture Master Report
By: Bill Moore | February 28, 2023

MAR BEANS



Given the recent carnage in Mar Corn (down .50) & Mar Wht (down 1.00) since mid-Feb & considering the record bean Brazilian Bean crop, Mar Beans have held up remarkably well – holding just 40 cents off their recent highs! Helping to support was the USDA OUTLOOK FORUM last week that estimated bean acreage would remain unchanged from 2022 at 87.5 MA & The Buenos Aires Grain Exchange lowered their Arg bean production to 33.5 MMT (INITIAL-48) – the lowest in 14 years! Also, the Macro Mkts scored a big down last week with THE DJI registering its biggest weekly loss of 2023! Normally a huge negative for Beans! The mere fact that Beans are holding at over $15.00 -right now -is quite impressive!

MAR CORN



Mar Corn was bludgeoned with a perfect storm of mkt events – which induced massive fund selling – resulting in a nearly 30 cent weekly drop! First was more-than-expected week-end rains in Argentina – Second, bearish #’s from the USDA AG OUTLOOK FORM including increased acres – 91.0 MA (88.6), stocks – 1887 (1267) & production – 15.08 (13.73). Finally, the Macros turned sour with the DJI down 1000 points for the week & the US Dollar up 120 points! Exports were expected to increase – even incrementally in 2023 – but that has been slow to happen so far! Still, the Corn Futures are hovering in the mid-6’s in early Feb – mostly off historically low carry-out! Should there be any additional hiccup in production from either hemisphere in 2023, May & July Corn could easily tack on .50 to .75 – especially if exports ramp up in Mar-June!

MAR WHT



In 2 week’s time, Mar Wht has experienced a free-fall – plummeting over $1.00 (8.00-694) for a plethora of reasons! The main catalyst has been Russia as they have inundated the global mkt with cheap exports from their record crop – as they attempt to finance their war efforts! Then, last week, the USDA OUTLOOK FORUM issued some higher #’s for this year’s crop – acres – 49.5 MA (ly-45.7), production -1887 MB (ly-1650) & ending stocks – 608 MB (ly-568). Also, a winter storm has helped replenish some subsoil moisture for the drought-ravaged Western Plains – finally, the Russia-Ukraine Grain Corridor Deal is expected to be renewed by Mid-March! The mkt is severely oversold now & due for an upside correction!

JUNE CAT



After 4 consecutive contract highs, June Cattle registered a key reversal (new highs & an outside day down) – a “tempting sell” but NOT SO FAST! Despite its really historically high level, the supply/demand fundamentals suggest a correction – not a top! The production decrease from the 4th Qtr to the 1st Qtr was the 2nd largest ever – & demand seems to be good enough to support further up! Last Friday’s bevy of livestock reports were positive – with the Cold Storage reflecting less than last month & the Cattle-On-Feed reflecting both placements & total on-feed at 96% of 2022! Currently, the only “fly-in-the-ointment” is a looming recession – which could sharply undercut beef demand!

APL HOGS



Burdensome supplies continue to plague the hog complex – highlighted by the 60% jump in Pork Belly Supplies from last year 70,134 (ly-44,707) – as reflected in last Fridays monthly Cold Storage Report! The down is especially egregious when juxtaposed against a cattle mkt which makes new contract highs every 3rd day! We feel the consumer may have partially turned the tide – opting for cheap pork chops versus expensive steaks – as the futures haven’t made any new lows in 2-3 weeks. But rallying from here is another story as the massive pork supplies will probably keep the mkt just consolidating at current levels!

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