The Soy was led yet again by beans and meal. The oil remains under pressure. The market is fighting the short term friendly aspect of the Argentinian smaller crop with the long term bearish fundamentals. The question is when will they collide. The demand for both US and Brazil will remain stout. This is keeping the funds under the market. The meal may be due a rally. The meal has broken off the highs as well as the crush margins. If meal rallies back the beans will follow. So, in the short term look for rallies as selling opportunities. lets look at the longer term outlook. The bean market will show growth,considerable growth in production over the next 6-12 months. The US with good yields will add to the carry. Look for bean acres to increase 500 t to 1 million acres from the last report. This will offer cushion. The south american production will return to normal with the Argentinian back to a normal production. This wont be felt until year end. The production will push global carryovers to 97-100 mmt. This will be a record. RECORD. In addition global oilseed production is reaching record proportion. This will push the global oilseed carry to 115-116 mmt. Also a new record. While this record production is rolling, the global crush will set new record. The availability of protein will be up considerably. This should have two effects. 1) The meal will come under pressure. 2) The crush margins should come under pressure. The question is not if, but when the market starts to price this in. Rallies are opportunities in the soy. In my opinion for both the 2018 and 2019 years. If we rally in the short run these are opportunities.
The Corn continues to gring higher. The fundamental story remains intact. A rally to 440-450 presents a opportunity to sell both 2018-2019 crops as a hedge. The question from the macro sense will be what south america does to their corn area. It is realistic to assume that a increase in corn acres is in the cards. The competition after this crop season could be more aggressive. The corn is being assisted by weather issues around the globe.
The Global Political outlook continues to offer volatility to the markets. This will be a constant as much is changing with the TRUMP administration. Both opportunities and risk are elevated in times such as they are. Take precaution.
” ONLY A MAN WHO KNOWS WHAT IT IS LIKE TO BE DEFEATED CAN REACH DOWN TO THE BOTTOM OF HIS SOUL AND COME UP WITH THE EXTRA OUNCE OF POWER IT TAKES TO WIN WHEN THE MATCH IS EVEN ” MUHAMMAD ALI the greatest of all time
BE WELL