The beans have broken sharply. The talk is that the tariff threats are the reason. It is my contention that the bean and soy complex in general is bearish. It would appear today that we have marked a low. This may be temporary in nature. The US will impose the crippling tariffs on July 6th. It is my belief that the Chinese will give and make some promise to expand the base of imports. It will not serve China to enter a trade war. They will lose. Look at the numbers – we buy and buy and buy. That is what fuels their economic growth. They have room to import more US goods. Regardless of the sector. It is my thought this will come to pass. This type of thing needs to happen from time to time. Looking at the fundamentals, the South American currencies have fallen to such a level to make soy very attractive. As I have said we are on a major shift into oilseed at the expense of feed grains. I think this is a macro trade. These types of scenarios change over a lengthy period. In my opinion we are just at the beginning of this. The acreage numbers are out at the month end. This will be interesting. It is my belief there will be more bean acres than anticipated. The price structure at planting made sense. The meal now may be due a corrective rally. Perhaps pricing will be defined at these levels. It is the meal that I think still has much downside. We may be 30-60 days early however. The global market will be awash with oilseeds, with high margins. The crush pace will be high. This ultimately will weigh on protein. Stay tuned.
The corn followed soy lower. The near term bottom may have been scored. The corn fundamentals are friendly in my opinion. The market has endured a lot. The weather has started very well. This has also contributed to the bearish feeling. The demand for corn is strong. It is my belief that the acreage may not be as high as anticipated. Also, the global weather scenario remains a bit worrisome. Look for corn to attempt to rebound into the acreage report month end.
Thank you for the comments, I welcome all sides of the argument. Food for thought is healthy. This is always difficult and there are many sides to consider. For a conversation or a long term strategy please call 800 993 5449, jwalsh@walshtrading.com You need not be a client, tire kickers are welcome to try out the ideas.
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