As I have mentioned. It is my belief the dollar has a major impact on what we are witnessing in terms of price. The recent break (dollar) has everyone bulled up commodities. Lets look at this for a minute. In 2008 the dollar was at 70. We rallied to 104 last year. Now we are correcting a bit. In 2001 the dollar was at 120 + . So, with the largest economic expansion underway since Reagan, the dollar will get really weak. I don’t see it. Pressing the dollar here make no sense from a historic perspective. How does this relate to the Ag commodities. Corn and Wheat have fallen to more historic prices both flat price, and in terms of their relationship. The Soy complex has not priced itself into the historic price range. Why ? many answers. One perhaps is the growth in Chinese demand. Answer. We have record global carryovers even with the demand. If the demand stagnates, where do we go from here. I am not a bull in beans. This market is riding on hopes and prayers. Again, that doesn’t mean the funds cant buy and buy and buy. They can. However, given what we are discussing, those price anomalies need to be used as a opportunity for the producer. If weather remains dry the beans may offer another hedging opportunity. My recent target was $10.15-$10.20 basis nov18. We reached $10.17 .
It is the Corn that has a bit more rally. In my opinion. The Global numbers will decline based on the S hemisphere production declines. This may open the window for US exports. In addition, lets look for a potential spark from the Feb 8 USDA report. Then acreage shifts. Can we force the 200 thousand plus shorts to the sidelines. If so be ready with the hedge. Either in the cash market, or on the board. Whatever works for you. I have openly said $396-$406 basis dec18 , This would put dec19 at $420 ish as well. As I have said take some sure thing money. Gamble, for lack of a better word with smaller percentages, but leave a little open in case a bigger rally rears itself.
One last thought for today. I have been bearish bonds friendly interest rates since bonds at 152, 6k per contract move so far. Consider the long term market and the cost of financing.
Be Well