SOY
The beans again came under heavy pressure closing down over 30 cents across the board. The main reason(s) perhaps are the weather has moderated. In addition, the export sales are slowing. This is significant as the USDA estimates are above most private analysts for Chinese imports. I mentioned yesterday the new crop. However, old crop estimates are still 1 to 2 mil mt for import estimates in China. These are significant changes and could indicate a bit more weakness. The products are being led lower by bean oil. Recently the Palm oil market is crashing lower due to significant stock build up in the oil. The Indonesian govt should loosen the grip on suspended exports. There is at present a pent up demand scenario that could put a floor under palm. However, the deep discount to soy should offer limited support to soy. The global shortfall in soy is changing at present. In my opinion the highs are in. The meal market has not picked up steam yet. Any downward correction should be supported. It is also my opinion the highs here are probably in. However any rallies in oil share may be met with resistance. The new crop is a completely different animal and should be looked at as rallies are opportunities in my opinion.
CORN
The corn weather has been positive. The dry weather has moderated. However the eastern belt this year seems a bit dry. The condition rating did decline. Although still positive in general. The corn needs to be watched. The near term weather is a driver and will determine price. The reality is with a good crop the market is over priced. It is my belief there are some acres in the northern states that will still switch to beans. This is a theory and remains to be seen. The nearby July corn is breaking out relative to the deferred. This could continue in the near term given the tightness in available supplies. This is something I have mentioned in the past. As with the soy, look at old vs new crop as different animals.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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