William D. Moore at the Chicago Board of Trade


Greenhouse conditions continue for the 2020 row crops – with ideal weather for the crops “maturity window” & record yields widely predicted!  The good/excellent crop ratings went up to 74% – 13% over the 10-year average! Only robust China exports have been able to offset the bearish weather – resulting in a “grind-down” mkt vs a “free-fall!  Wed at 11am the USDA issues its monthly supply & demand numbers – although pundits feel the Sept Crop Report will be more reflective of actual yields!  On 8/15/20, the US & China are meeting to review Phase One! A big positive especially in light of the recent friction between the two behemoth trading partners.  Macros mkts support! A lot of “bad” is already dialed in!!


Corn doesn’t have many friends out there – certainly not the China Demand that beans enjoy – and domestically ethanol consumption has waned as the economic recovery has stalled out due to the Covid resurgence! And the crop ratings – though declining 1% to 71% are historically high at 10% over the 10-year average!  However, the mkt was already very cheap at 10 year lows before the 2020 crop was planted & many of the bearish fundamentals are dialed in! After all, “how much can you beat a dead horse”? The US Dollar has been in a free fall & the DJI is only 1500 points off its pre-Covid highs! So we wouldn’t push the short side! The crop is far from made! Look for a turn-around signaled by the mkts inability to go further down on bearish news!


Today Sept Wht was able to “stop the bleeding”  stabilizing after a 60 cent drop (550-490). The mkt was supported by another  Egyptian tender & a 4% decline in the gd/ex rating of Spring Wheat! Also, the storms that ravaged parts of Iowa’s crops caused some short-covering.   As well, the USDA WADSE Report on Wed had some shorts taking profits! Sept Wht has resisted the new-contract-low-action of KC & Minn Wht as well as the increased production in Russia & Australia! The mkt will most probably consolidate in front of the USDA’s Supply & Demand Report Wed!


Impressively, Oct Cat has maintained a healthy premium to cash while slaughter has come in under expectations & beef demand has at the same time has exceeded expectations! The result has been a technical upside break-out – with the contract reaching its highest levels since early March! Should the economy resume its rebound later in the 3rd Quarter, the rally could be sustained!


One step forward & one step back – the ongoing frustrations of a trading range Mkt – trying but failing to escape its consolidation! Yesterday, on the back of solid pork demand, Oct Hogs surged $2.00 – only to surrender all those gains today! Chinese Demand has been robust but not quite enough to offset burdensome daily slaughter #’s! Today’s action was particularly disappointing in the face of the large gains scored by Oct Cat!

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