Ag Commentary

John WalshGrains

The markets rallied again today based on concerns over dryness in central and northern Brazil. The forecast has some chance for improvement. This however remains to be seen. So we have built in some risk premium early. justifiable ? Remains to be seen . Looking forward the US carryover at 430 million bu is probably understated by 70 – 90 mil . This is deduced because the exports for new crop are running behind estimates as well as the 5 year average. In addition the stocks in the southern hemisphere are well, well, above a year ago. And unless the weather problems persist they will climb again despite the reduction in production year on year. The global carry has a real shot at 98-100 million tons. We are growing carryovers at a time of record demand. The demand growth looks to stagnate in the coming years.  This after years of growth due to Chinas demand for beans. This rally is a opportunity for producers. Sell old crop and new crop alike. This is a opportunity. in addition perhaps look at selling beans against your corn production. Meaning hedge your corn with the bean futures. If south American production is good, new crop beans are well overvalued.

As always trade with stops, quantify your risk, know your costs

 

Be Well