Ag Commentary

John Walsh General Commentary, Grains Leave a Comment

Commentary: Thoughts regarding the relationships in the AG sector. The Chinese have begun some purchases today. The exact quantities are not known at this time. However, the market fall put beans and corn in a relative position globally. This allowed the Chinese to buy at a par value. Looking out towards planting, it occurs to me that perhaps the acreage estimates are not set in stone. The Chinese could buy double the amount of beans from the US related to last year. Not double the total global buy, just double what they bought from us. This could give us a meaningful rally flat price in beans and also relative to corn. The current corn bean ratio is approximately 2.5-1. A rally in new crop beans close to $9.00 could start the switch in acres. In addition, it appears wet in the South. This needs to be monitored. A shift to bean acres in theory could mean that the recent dive in corn prices could have put a low in place. Make no mistake, this doesn’t mean we will scream out of here. However, the worst could be over for corn. The May corn marked a low of 332 yesterday . This could be a quantifiable low in the short to medium term. The recent moves in the soy complex have driven oil share down to approx 28.5%. This is 9% lower than the share at year end. This move creates opportunity to hedge margins. In addition it should be watched as the global vegoil remains friendly. It is noted that the collapse of crude has many concerned with blending rates going forward. The duration of the price plunge needs to be considered and followed of course. In my opinion, we are in uncharted territory. It is important to exercise extreme caution. Always have a quantifiable exit strategy win, lose or draw.

Trade Suggestion(s)
NA today
Risk/Reward
Futures-
Options –

BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
800-993-5449
312-208-8836
jwalsh@walshtrading.com
www.walshtrading.com

Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.​

Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.​

All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.

Leave a Reply

Your email address will not be published. Required fields are marked *