Commentary:
The soy closed sharply lower today. Let’s review briefly yesterday’s numbers. The domestic numbers were much as anticipated. The carry drops to 120 mil bu, due to the crush and exports being raised. It is true the shipments relative to sales, thus far, are excellent. The crush as well, has been very strong due to reasonable margins for quite some time. A couple concerns I have in the longer run. The Chinese have a reasonable amount of bean stocks due to the excellent imports over the last months. The Chinese have cancelled some Brazilian purchases this week. In addition, the expansion of the Asian hog herd may be experiencing some issues with the ASF again. My point here is we may be witnessing the smallest carry number of the year. This while harvest is starting in a small way in South America. This will take a bit of time to really ramp up, but the point it is starting. This will limit US purchases potentially. If, and I say if, the Chinese cancel or refrain from large US purchases going forward then the export pace is over stated. The stocks to usage could climb over the next 6 months. I think it is prudent to realize where we are priced. Although the beans are approx one dollar off the recent high. They are still high priced from a macro sense. Exercise caution. The one market that may be the leader going forward is the bean oil. The demand is not as elastic as perhaps meal can be.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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