The USDA report out of the way. There were no major surprises, just confirmations of what is known. The soybean stocks are confirmed a record at this time. This is of course significant and is a continuation of the growth in oilseed stocks in general. This stock number is not due to China. Rather production growth. The acreage was increased as expected. Less than I thought given the price at planting. Large non the less and puts bean acres above corn. A rare scenario. Where do we go from here. Lets make no misunderstanding. The numbers remain bearish. However, given the time of year. Given the hotter and potentially dryer model, we may have a chance to rally a bit. The market that I feel most bearish long term is deferred meal. There is a plentiful supply of beans to crush at near record margins. Give the commercial the record profit. In addition the there will be no long term shortage of meal in competing countries. The funds remain long meal. This at some point may become a burden. lets see what happens.
The Corn numbers were less than exciting. Also falling in line. The acreage here was higher than I thought. But in line with the guesses. The feed grain balance did have a bullish input. The french wheat stocks were down 4 mmt. This continues to heighten the global feed grain concerns in the current market place. The corn numbers with trend yield indicate a 1.6-1.7 carry. Not a burden. The weather now is important. In addition a settlement to NAFTA will give a friendly boost. I believe this is coming. Remains to be seen. I think the lows are in corn until the crop comes in. The question to me is will we have any bullish inputs to drive us higher. There are ways to make this bet while quantifying your risk. Users need to have risk coverage in my opinion.
There is a great deal of opportunity as well as risk in this market. There are so many moving parts. To discuss a long term approach feel free to contact me. I appreciate all comments for or against my opinions. This to me is a moving puzzle we all are trying to get in step with. It is a wonderful dance when we are. A complete bumble when we are not. Oh yes a ramble. 800 993 5449 jwalsh@walshtrading.com
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