There exists a significant relationship between feed and the animal. This is no great revelation. At present, the Chinese produce and consume the largest hog herd in the world. Approx 500 million pigs annual. There is much concern about the recent outbreak of African flu. It is my belief this may be just getting started. The Chinese lack the oversight in a vast majority of the production, due to the mixture of corporate and mom and pop feeding units. In addition, the feeding of the animals is not controlled like much of the world, certainly not like in the US. It has been suggested by some analysts that the Chinese will start a slaughter rate that is earlier and faster now to attempt to stave off the problem. Further, it has been suggested they will reduce numbers up to 10%. This is also due to a stagnant pork demand and overproduction. That is a lot of feed. I am perplexed why analysts continue to talk of China demand, when we may be on the verge of a contraction. This remains to be seen, of course, and these are my thoughts. Some other thoughts, the pro farmer crop tour thus far confirms the USDA estimates with yields looking good. It is important to note that the bean basis remains weak. In addition, the southern harvest is now under way. This will add to availability of both beans and meal. The next things to watch, the acreage in Brazil and Argentina. The Arg plantings will rebound from last year. It is Brazil, however, that could see a much bigger jump than anticipated. Keep an eye out for the China / US talks. They could offer a rally that, in my opinion, is a hedging opportunity
The Corn continues to struggle. The Wheat it seems has played itself out and this offers resistance. In addition, the corn market at present is ample supplied. The next leg up, should it arrive, will be based on a demand need. It does appear to me that this window will exist until the next South American harvest. Argentina is upping feed grain acres. Weather will be important there. The US remains the dominant global supplier of corn. These weak days present an opportunity for users/feeders to extend coverage. Producers, at present, remain patient.
I appreciate the feedback. Please feel free to contact me regarding long term thoughts on the market. 800 993 5449 or jwalsh@walshtrading.com.
” IT IS A ROUGH ROAD THAT LEADS TO THE HEIGHTS OF GREATNESS ” LUCIUS ANNAEUS SENECA
BE WELL