AgMaster Report - Tuesday, April 4


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The worm seem to have turned in 2023 – as all of a sudden, the stocks have tightened further from the beginning of the season – as the surplus of Beans from the Brazilian record crop has been more than offset by a decades-worse drought in Argentina! And the USDA reported Friday that bean acres would stay at last years 87.5 MA & that carryout would be reduced to 1685MB (exp-1753). Finally, OPEC announced yesterday at 5pm – that they were lowing their output by 1 million barrels/day – beginning on 5/1/23 thru 12/31/23! Of course, this is very friendly to biofuel demand! And China has opened up – importing corn most every day! The result is a 7-day $1.20 rally – with pressure now put on the US Crop to be good!


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May Corn has been the welcome beneficiary of an amazing Chinese buying spree over the past 3 weeks that has totaled nearly 4 MMT – as they recognize how tight the stocks are, how they were further squeezed by the Argentine drought & that US Corn is the cheapest on the global mkt!Even a projected 3 million acre increase in corn planting – 92.0 MA – couldn’t blunt the rally as May Corn advanced 11 cents after Friday’s USDA Report! Many pundits were skeptical of the acreage #! Plus, the OPEC news over the W/E was very positive for ethanol demand!Now, as the market focus changes from South American harvest to US Planting, there is pressure on the US to come up with a decent crop to rebuild the carryover stocks! Finally, the Macro negativity spawned by the Banking crisis of Mid-March seems to have stabilized as no more banks have failed – in fact, since 3/15/23, the DJI has rallied 2000 points (31,400 -33,500)!


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Despite negative wheat #’s from the USDA on Friday, acres 49.8MA (ly-45.9) & stocks – 946 MB (exp – 928), May wht closed steady on the day – buoyed by higher closes in it sister markets – corn & beans! As well, there are weather issues for the Winter Wheat crop with drought conditions still prevalent in the central plains! Also, Russia has made noises a week ago that they felt Global wht prices were too low! There is a sizable short position held by fund traders that may get nervous – when Wht futures couldn’t go down on a bearish USDA Report!


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The “supply bull” keeps on chugging – emboldened by more friendly production #’s! The 2nd Qtr beef production is to be down 6.2% from last year & 210 million pounds from the 1st Qtr – when beef production normally increases into the second Qtr! However, despite the positive fundamentals, the mkt occasionally slips into “overbought mode” & needs to correct – which it has done the last 2 days!

The strongest demand period of the year is right around the corner – and should catapult the June futures to new contract highs by Memorial Day!


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Finally, it appears there is “light at the end of the tunnel” for the woebegone hog mkt that seems to have no bottom – even as it offers grocery shoppers an attractive alternative in the supermarket – WHY NOT CHEAP PORK CHOPS OVER EXPENSIVE STEAKS? But this psychology has not caught on yet! However, bullish production #’s from the USDA (2nd QTR production under 1st Qtr) & a friendly Pig Crop last week would seem to imply that bullish traders now have a supply argument to support higher prices! That coupled with the upcoming outdoor barbecue season could at-last spawn an upside turn-around!

More By This Author:

AgMaster Report - Wednesday, March 29
AgMaster Report - Tuesday, March 21
AgMaster Report - Tuesday, March 14

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