William D. Moore at the Chicago Board of Trade
From out of nowhere, a wildly bullish acreage report was dropped on the mkt today
By the USDA – reducing corn acres from Mar 1 by a whopping 5 million acres – from 97 MA
To 92 MA! This was easily the biggest Mar-June reduction in reporting history! Its especially
Stunning given the green-house type weather conditions we’ve had this Spring! And the
Bullish # stood in stark contrast to the quarterly stocks at 5.224 BB -well over the expected
4.990! The mkt apparently figured the heavy stocks were already dialed in but certainly not
“surprise acres”! They may have been the result of Covid fears & certainly tighten up S/D!
The bean acres were also friendly – 83.8 (exp – 84.7) – but were not the bullish
shocker that corn was! Nonetheless, they rode the tide for double-digit gains to their highest
close since late March! Their Quarterly Stocks were more in line with expectations –
1.386 (exp-1.381)! The Beans have clearly been the upside leader this Spring – which is very
Surprising considering all the saber-rattling going between US/China over the Covid Blame
Game & the Hong Kong protests! Yet Phase 1 is still intact & China is buying! Support is
Also being drawn from the Macro Mkts – the DJI was up over 3600 points for the 2nd Qtr
& crude oil was up $10. And the mkt is already cheap at 10 yr lows! Finally there is no real
“weather premium” currently in the price structure! The technicals (above) are positive!
July Wht along with July Beans rode the Corn Acreage Shocker delivered by the
USDA Tuesday – registering double digit gains & following thru on Wed! All Wht acres came in
Neutral at 44.25 MA (exp – 44.70) – albeit the lowest acreage # in over 100 years! However,
Quarterly Stocks were bearish at 1.044 BB (exp- 979)! Once again, the mkt ignored the stocks
#’s in deference to the acreage #’s! Also, hotter, drier weather is forecast for the first two
Weeks of July – with no real “weather premium” in the price structure! Finally, harvest
Pressure for the winter wheat crop (41% in) has run its course!
The downside seems to be exhausted in corn, beans & wheat as the mkt awaits
July weather forecasts! A large short open interest & 10 year lows will be supportive for any
Up – should the weather dictate!
Aug Cat’s very promising $20 Spring Rally (81-104) has stalled out
Morphing into a two month congestion area (94-102)! Seasonal beef weakness & a slow-down
In the re-opening of the economy caused by the Covid resurgence are the culprits! What
Once was a big discount to cash has turned into a premium! The mkt needs the economy to
Continue re-opening to resume its up!
Just what the Pork Complex DIDN’T need was last weeks bearish Pig Crop Report –
Forecasting heavy supplies for the remainder of the year! And since the report, the Aug Hog
Contract has had trouble filling the downside gap! And that needs to be done before the mkt
Can stabilize! Meanwhile, the resurgence of Covid in California, Arizona, Texas & Florida
Has derailed their re-opening plans – casting a pall over meat & pork demand!
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