A two sided trade today in the AG. The beans responded slightly to turn around Tuesday. The general thought is that there will be an increase of bean acres this year. The question will be how many. It appears there is a shift in the Delta at present. The weather through the rest of the month will dictate other areas. This will be a big deal and offer opportunity in the spreads and relationships depending on how things play out. It is no secret I am not a bull in the soy. The bullish argument based on a global drawdown in stocks to 91-92 mmt when we had 68 mmt 2 years ago, doesn’t hold water to me. It appears there is a stagnation of the hog sector in China. This, if true, has long term repercussions. I am watching the meal closely as we have broken approximately $20 per ton. Was that a double top high? Now the moving averages on the daily are pointing down. OR will we reverse and run right back up, which seems consistent with the typical scenario. I think there are some changes here and that this could be an interesting opportunity. The market will probably bounce in a range here awaiting acreage estimates. Rallies in my opinion are still hedging opportunities. July near 1045-1050. The Nov 1040-1050. Watch the 2019 for rallies above the 10 mark.
The Corn had a nice solid up day. The planting progress is a bit off, but can be made up for. The decline in corn acres looks to hold true. Perhaps a few more acres in the Delta will be reduced. The global corn story remains friendly. The Brazilian crop appears to be in decline due to weather. This will help US exports. The weather here will be key. A problem will draw US stocks to 1.5-1.6. This becomes friendly and very supportive. It is important to note that the global numbers are declining and will be potentially the tightest in 5-6 years. The July corn should hold in the recent low range. A further decline presents a buying opportunity looking for risk premium to build through the spring and early summer.
“ITS NOT BECAUSE THINGS ARE DIFFICULT THAT WE DARE NOT VENTURE. ITS BECAUSE WE DARE NOT VENTURE THAT THEY ARE DIFFICULT.” SENECA
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Be Well,
John Walsh
800.993.5449
jwalsh@walshtrading.com