Ag Commentary

John WalshGrains

Soy Complex
The soy complex exhibited further weakness today. The market continues to digest the USDA numbers which were decidedly bearish. Not only the potential planted acreage was larger than anticipated, but also the stock number was larger as well. This indicates a larger crop than last year. The trend continues of higher yields due to genetics. This trend remains intact in South America as we continue to see yield increases there as well. The soy complex is well supplied in 2017. Look for continued weakness over the long-haul. Small rallies should be considered opportunities and corrections in the macro trend.

Corn
The corn market is exhibiting strength based on the reduced area in the USDA report. The funds are still short and should move towards a neutral position. This could help the corn market rally a bit more. It is, however, important to not lose sight of the fact that the global availability of feed grains is high. Therefore, the corn market will remain in a broad based sideways range. We are now looking towards challenging any recent highs. The fundamental makeup most likely will help the market remain capped a bit higher than current levels. The corn should continue to gain relative to the soy complex over the near to medium term. It would take a sincere weather problem to change the global ample supply. Therefore, be patient, but look for a corn high sometime this spring.

As always, quantify your risks.

Be well.