COMMENTARY:
The USDA report was released today. The were no new surprises. The bull was not however fed today. I have a couple minor thoughts related to today. The domestic carry at 285 is supportive. However, the south american crop is probably fairly well estimated and given the recent rains the decline in production has halted. The point is that further drawdowns may not be in the cards. The global numbers at 90 mmt are still more than ample. I was reviewing other similar years over the past 10. Excluding the obvious geopolitical problem. The 2010/2011 year had a similar stocks to usage relationship and bean prices were approx 11.30 per bushel. That was with a global stocks of 70 mmt. This presents food for thought with 17.00 beans. The reality is that the market can and may go higher. The outside participation is large, Funds, ETF’s, ETC. I also am interested in the overall demand out of China, which is declining in the soy. The main point of all of this is that I invite producers to exercise caution and move old crop with these large inverses. The other thought is that a quantifiable way of taking on some short side could be through bear spreads. The market at present is very inverted. There are a lot of unknowns at present. At all times have a quantified risk.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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