The USDA report is in the books. There really were not any surprises from my thought regarding the markets. To recap. The US carry is growing. The USDA only reduced Chinese imports 4 mmt. The 18/19 marketing year the carry is projected to swell to 955 million bushels. This is off the charts. 500-600 is off the charts. At this time prices are overvalued. The one fear factor that could catch traders/hedgers is the US, China relationship. If the problems are worked out we will most likely rally. We will still be in a bear market, however, opportunity to sell at higher levels may still present themselves. I am bearish and will remain so until something major changes. The markets in my opinion are entering a new phase of bearishness. We could be in a sell rally market for some time. The USDA is projecting the meal carry at historically high levels. This while the demand remains stout. The meal needs to be watched for a couple of reasons. The first, there are many competitive protein sources that have production growth. The second is the African Swine fever. This is still expanding. It has yet to hit a sow unit, or a massive facility. It is my belief this is only a matter of time. It is also my thought that the Chinese are on a longer term shift with the number of animals in decline.
The Corn traded two sided all day. The close saw a higher board. The corn, as expected, showed a production decline, two bushel to the acre. This drew down the carry a bit. The trend has been down. This puts corn in a solid spot for a bit of time. In addition, the global feedgrain fundamental picture can be looked at as friendly, in my opinion. The corn should continue to grind higher. The USDA did rebalance the global stocks in China. The important thought here is that the Chinese carry a large percentage of the global corn stocks. This is actually friendly and not bearish in my opinion because those are reserve stocks. The world remains a bit tight at present. Look for corn to work higher potentially.
Thank you for you interest, to discuss long term opportunities 312 208 8837 or jwalsh@walshtrading.com
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