The week behind us as far as the AG markets go. The dispute and trade war will continue for a bit longer with President Trump saying progress has been made. There will be no escalation of Tariffs. This is all a positive. The Ag Outlook is releasing numbers. The expectation for the Bean acres is a reduction of 4 million acres. This would produce a 845 carry, still historically high. A couple thoughts. It is my opinion that the price relationships do not in any way warrant a 3-4 million acre shift. In addition, the projections reduce the trend line yield. I am not sure how these numbers are actually derived. But if a reduction of 1-2 million bean acres happens and the trend is actually what we have witnessed last year, then we are well at or above a billion bu carry in beans next year. That is my thought as to where we go. If realized, rallies from here need to be sold. Marketing this year especially is key.
The Corn numbers were increased. Even with the uptick in acreage a carry of 1.6 is realistic. However, it is my contention the corn acreage is over blown – 1-1.5 million acres. That would leave room for a further reduction as suggested yesterday 1.45 bil carry or so. It is being talked about today that the Chinese may have purchased some US corn. There is no confirmation yet. This would certainly be significant and would open the door for carry reductions. In addition, a tech inspired rally may ensue. I have mentioned that corn may trade to 425-430 basis July. The other important element to this coming crop will be early plantings in the South. Will wet weather limit corn acres? Look to be long corn with a quantifiable risk through stops or options.
Marketing this year will be a key factor in profitability. To discuss long term plans 800 993 5449 or jwalsh@walshtrading.com
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