GENERAL – The stock market is moderating as inflation starts to move more sideways. Please remember sideways at record highs over the last decades. It is my belief the cost of capital will continue to increase. Therefore the stock market rallies represent a sale. It is just where. Quantify the risk.
ENERGY – The crude bounces again today. Please think regarding the overall energy policy. In my opinion it is so flawed, unless demand is shut down completely the crude has a natural bid under it. In addition the global market has at present no desire to appease the US needs. This will continue. However, it is important to note demand is on the decline. This is important but probably not enough of a decline to matter yet on the macro sense.
SOY
The beans rallied today. As mentioned yesterday the market will now focus on the upcoming weather. As well as the demand from China. The USDA releases the stocks report next week. This will be important as most expect a decline. The longer term also will look at the acreage and if the USDA will show further declines or a surprise with northern acres added back. I haven’t a clue.
MEAL/OIL – As mentioned the oil share lost enough. The bean oil was able to rally back today with both global bean oil and palm oil showing gains. This could last a bit more. The crude strength also has had an effect. It is however my belief at present that the highs are in bean oil. I am looking for a further rally as an opportunity. The meal remained higher. There may be a bit more strength. I am looking at meal however, as the highs are in. The Aug forward spreads should be watched. They have given up 6-8 dollars in two trading sessions. The domestic hogs are contracting a bit. As well as the Chinese market due to Covid lock down.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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