The usda is out of the way. This report is important in my opinion and opens the door for hedging opportunities. The usda lowered the 18/19 domestic carry to 385. This may open the door for a bit of a bounce that in my opinion presents a hedging opportunity. The global numbers remain very large. In addition the Brazilian crop was raised to 119 mmt. This is huge, 2mmt larger than anticipated. This does a couple things. Adds export competition and eases the meal needs after the shortfall in Argentina. The Us acreage in my opinion will go up. Potentially 1 million acres. This report is due month end.It is also my belief that perhaps the export number is a bit overstated. Especially with the increase in the Brazilian crop. These facts if true put the carry well above 400 million bushels. The currency valuations in Sa ensure more bean acres in the new year for the southern hemisphere. The main point here is a 25-40 cent rally should it ensue is a opportunity for hedgers.
The corn market, in my opinion, is the big winner in the report today. The Usda did a couple important things. They lowered the carry into the 1.5 billion bu range. This was due to the exceptional export pace. This opens the door for further gains, especially if there are any weather glitches throughout the growing season. In addition, the global numbers continue to decline. This is important because the weather in the black sea is poor for crops at present. In addition the Brazilian corn continues to decline. Further reductions may be possible. The corn with any issue could have a move to 450-460. This is my opinion, quantify your risk. It also allows corn to move against the soy and further the global shift we are witnessing. These macro shifts are important and if it is the case a longer term change could be underway.
I want to thank all for the nice responses to the blog. They are frequent and appreciated. In addition all thoughts are welcomed, especially contrary opinions. Food for thought is healthy. To discuss any specific long term ideas 800 993 5449 or jwalsh@walshtrading.com
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