The soy was under pressure with the thoughts switching to the USDA report Thursday. The crop progress today should show the pace about normal. The weather forecast is drying out in many key areas and will allow the harvest to progress nicely. There will, of course, remain spots that are problematic. That is normal for any year. There is plenty of calendar days to get the crop out. Looking at what I consider some key fundamentals in the near to longer term. The Chinese Ag minister yesterday said the African swine fever is an ongoing serious issue. The Chinese oversight is reducing the amount of protein required in hog rations. In addition, the Chinese are looking to reduce demand needs of soy by 10 mmt. The Chinese are approving India for oilmeal shipments. All of these are significant to the global protein trade. In addition, the Ukraine sunflowerseed crop is much improved year over year with 80% harvested. The Canadian canola shipments to China continue to expand. I have said it over and over. I do not see a bullish protein scenario here. To the contrary. I see a market that is potentially way overvalued. As I also say, I have been wrong before. The only guarantees in life are death and taxes. To the producers, please look out at the 2019 board. These prices could be presenting an opportunity.
The Corn is under more pressure. It does appear to me that the market is still in a near term uptrend. The report Thursday could end this or be a catalyst to move higher. The yield will be important. In addition, the President, it is said, will announce tonight a shift to e15 all year round. There are analysts that think this could add 200-250 million bu of annual usage. Thus reducing the carry. It is a positive to demand regardless of the estimates. That fact would also increase DDG availability cutting into other protein sources. The export pace continues to be excellent. The export of ethanol remains solid. The corn has some positive fundamentals. A boost is needed to get the market moving. Perhaps Thursday will provide that. There are some short dated option strategies that could present a reasonable risk reward.
Thank you for all the comments. I appreciate all thoughts for or against my ideas. That, after all, is why we do this. To talk shop 800 993 5449 or jwalsh@walshtrading.com
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