There may be a significant shift going on with respect to the CORN BEAN relationship. Looking at Corn first, I indicated yesterday we may be putting a low in the market at present. The reasons are compelling and just being realized. The Southern hemisphere between Brazil and Argentina are experiencing crop losses. To the approximate tune of 11 million tons combined. This could knock the global carry to 192-193 million tons. Two more weeks of dry could spell further reductions. The US bean corn price is out of whack. One has to give. Beans break or corn needs to rally. Given the fund makeup in corn, I suggest we should witness a moderate rally. The potential near-term targets basis DEC is 396-405. Further reductions due to weather could push a bit further. This will set up a selling opportunity for the commercial crowd. Use 4.00 plus prices to hedge.
The beans are a different animal. They are rallying on weather. In addition, the peso valuations are leading producers to hold beans. However, it is difficult to change the global carry much at present. The Argentinian crop is drawing down while Brazil has gained. Almost 1 for 1. Therefore the global carryover will remain just under 100 million tons. Huge by all accounts. This rally is a hope rally. To that end, take advantage of prices to sell new crop Nov $10.10-10.20. In my opinion, these are prices that are way too high.
There are opportunities here if quantified properly. Especially in the spreads. Give a call at 800-993-5449 to talk.
John Walsh
President, Walsh Trading, Inc.
800-993-5449
jwalsh@walshtrading.com