Commentary: The soy came under some pressure today. The pressure stems from a couple thoughts. The USDA will release acreage estimates soon. The thought process is the bean acres could increase by 9 million acres. In addition, this recent rally could add 1-2 million more acres at the expense of corn. This is an idea floating around. The question is, will the current bean corn acreage ratio make that happen? In addition to the acreage concerns, the Brazilian exports are larger than was anticipated for March. The Argentinian strikes have not materialized. This allowed for meal inverses to give up today. At present the margins look healthy and will continue to offer incentive for a large crush pace. It seems logical that the long run will weigh on margins. This remains to be seen as they always seem to bounce back. The Argentinian meal exports were curtailed. This should start to pick up a bit past April. The oil share is approx 28%, approx 8% off recent highs. Will this be enough? Given global oil stocks one could make the case. I suppose the big question is blending rates after the drop in crude. There remain many questions that will be answered in the fullness of time. Whatever your view, exercise caution.
John J. Walsh
President, Walsh Trading, Inc.
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