AgMaster Report – Tuesday, Dec. 19

We’re officially amidst the HOLIDAY DOLDRUMS – the 2-week year-end period encompassing Christmas & New Years! Volume is down & volatility could be high & new fundamentals are scarce! The above chart highlights that fact as the Dec has so far given us a tight trading range (1290-1340) which will probably continue thru month-end! The main features offsetting each other – giving us this range – are the weather in N & S Brazil versus an active export mkt! Rain in Brazil depresses the mkt but frequent 8am flash sales rally it – resulting in a stalemate! Helping the Bulls has been a 500 point plummet in the US Dollar & a $6 rally in Crude oil! S/A weather issues should ultimately rally beans sharply!
For the past 5-months, Mar Corn has been confined to a 45 cent range (475-520) – with a substantial 15.1 BB harvest & ample supplies providing the headwinds & a falling US Dollar, a rallying crude & occasional exports have been the tailwinds! But with US Corn being the cheapest corn anywhere in the globe, very strong domestic demand & S/A weather issues, we feel the “arrows are pointing up” for corn – especially considering Mar Corn is a whopping $1.50 off its Summer highs! Indeed, we feel that low prices will eventually cure low prices!
8 higher days in a row finally established a low in Mar Wht after a long, bearish slog in which a continuing inundation of Cheap Russian Wht into the Global mkt kept it “under wraps”for a long time! But finally, their supplies have dwindled & US Wht has become competitive on the world mkt – as evidenced a few wks back when China on 4 out of 5 days bought US Wht – announced by flash sales! The resulting 90 cent rally (560-650) finally stalled out as a reduction of Russian Export Duties, a recovery in the dollar, a resumption of Australian harvesting & rain in the US Southern Plains forced the mkt to correct! However, the trend is now up & as the mkt awaits more Chinese imports!
It looks like “enough is enough” as a $33 break in Feb Cat (196-163) & an 80% reduction in the net long (119,000 to 22,000) were together enough to establish a low in Feb Cat on 12-7-23 at 162.50! At this extreme oversold point, exports started to come, shorts covered & bargain-hunters dived in! And with Friday offering 3 major meat reports at 2 pm – Cattle-on-Feed, Pig Crop & Cold Storage, more short-covering is likely! As well, 2024 production in the 1st three quarters is predicted to be 5-8% under this year! Finally, beef demand should hold up well into the Dec Holiday period!
After testing the contract lows last week, Feb Hogs rallied resoundingly $6 (66.50-72.50) – with such velocity that we feel that those lows are now established as seasonal lows!The mass China liquidation has waned & last week’s export sales were the highest since Nov 2! Much like Feb Cat, the lows seem to be in – with good enough demand thru year-end to support the mkt. As well, with the 3 major livestock reports due on Friday, the remaining shorts are getting out!More By This Author:AgMaster Report – Thursday, Dec. 14
AgMaster Report – Tuesday, Dec. 5
AgMaster Report – Thursday, Nov. 30


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