SOY COMPLEX
The weather in Argentina remains dry. The Brazilian crop is a bit wet in areas. The market has a couple questions to answer. First, what is the actual Argentinian crop size. Second, does it matter given the tremendous growth in carry over the past three seasons. The US may see an uptick in either bean or meal exports. Most likely meal with the crush margins on fire. Of course the Argentinian old crop stocks are huge and can make up for the production shortfall. In addition, the Brazilian crop is 114-115 mmt, 3-4 mmt larger than the USDA has plugged in. None of this has mattered as the funds want a bull market. As I have said treat this rally as an opportunity. The nov 18 is again at or above 1020. This was the recommended level to make sales. 1040-1050 may be possible, but at that point the market has way surpassed and crop reduction. It is time for sales with pricing above the board. Perhaps long term puts present opportunity to lock in a guaranteed floor. These prices do not reflect the growth in production. Granting the demand is robust. The meal above $380. There ARE OTHER PROTEIN SOURCES. THE OLD ADAGE, HOGS DONT EAT $400 MEAL. WILL THIS HOLD TRUE? Does this rally ensure an expansion of domestic bean acres. One could make that argument.
CORN
The Corn has not experienced any explosive activity. A steady climb. The $400 dec 18 level has been reached. There remain problems in Brazil. The US is competitive and a reduction in acreage will give the corn a reduction in the carry. 1.8-1.9 billion. This will make people wait for a crop next fall to ensure the bushels are there. Corn in the long term will have the opportunity to make further advances with poor weather. In the near term we are close to putting in a temporary high. Personally I like the outlook for corn stability more than beans given the makeup of the market.
Be Well,
John J. Walsh
800-993-5449
jwalsh@walshtrading.com