AgMaster Report - Tuesday, May 7


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The above chart speaks volumes about July Corn’s upside technical breakout from a coiling, consolidation pattern the mkt was in from Feb-April! And strong fundamentals validate the move – prices are $2.00 cheaper than last Summer – thereby dialing in the adequate carry-over, weekly exports are 35% over 2023, extreme flooding has hurt S. Brazilian crops, excessive rains have slowed US planting & dryness in Russia has shrunk their wht crop! Finally, supportive macros came from the Fed last Friday as weaker-than-expected job #’s resurrected hopes for an easier monetary policy! In addition, the El Nina-La Nina weather shift suggests a hot & dry summer! From current price levels, there is no margin for error!


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Likewise, July Beans have authored their own upside price explosion – rallying nearly $1.00 in just 4 mkt days – responding to the historic flooding in S Brazil – the worst in 83 years! The crops down there were already on the wane – this will certainly exacerbate their situation! As well, Argentina has its own set of problems with a recent frost & the high probability their transit workers are going on strike! The Feds lower Non-Farm payroll #’s were under expectations Friday which has helped break the US Dollar 200 points in a week – which is friendly for our exports! Like corn, beans are $2.00 cheaper than last summer – which should bring in more exports – & biodiesel demand is strong! We have seen what a weather hiccup in South America at the very tail-end of harvest can do to bean futures! That impact would certainly be magnified should the same thing occur in our growing season this summer!


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Unexpected rainfall in the SW Plains opened wheat futures lower but persistent dryness in the Black Sea areas impacting Russia & Ukraine rallied all three wht contracts 22-23 cents higher! Russia has had the lowest precip for April in 10 years! Plus, spillover strength in corn (better exports, pltg delays) & beans (flooding in S Brazil) augmented the wht rally!


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Persistent heavier daily weights & slaughter are offsetting the solid demand offered up by the “grilling season” keeping the June Cattle in tight trading pattern some $7-8 off its 2024 highs! Recurring Bird Flu rumors seem to stop any rallies but seasonal demand supports on breaks!


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June Hogs have been a virtual “train wreck” the past 2 weeks – dropping $10 (108-98) due to several factors – a record long open interest, heavier daily weights, lost demand to beef due to Bird Flu mitigation & poor exports as a result of China’s over-production! However, the mkt is currently very oversold & due for a correction – especially in front of export sales Thur & the WASDE REPORT on Friday!

More By This Author:

AgMaster Report - Tuesday, April 23
AgMaster Report - Wednesday, April 17
AgMaster Report - Wednesday, April 3

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