COMMENTARY:
SOY
BEANS – The soybean market is rallying today. There are a couple reasons. First the crude market is continuing its higher trade. The second and most important is the bean oil is making a significant move higher. More on that to follow. The beans can feed a bit more off of the vegoil strength. It is important to remember now, in my opinion that these prices are looking rich based on the fundamentals. The carry should grow to at least 300 million bu into the new crop year. The Chinese purchases have slowed. This should continue especially as it relates to US beans. In addition, the South American weather has turned much more favorable with Brazil receiving ample rains. The point I think here is, look at this as an opportunity both old and new crop. When vegoils stop, the market will as well.
MEAL – The meal has turned into the weak link in the complex. The flat price is a bit weaker than I thought was possible. Not in a grand way, rather taking selling as oil trudges higher. I will be patient here and look at the long term needs if crush in China slows. This energy situation is real. The ramifications could have an impact. The oil today is the story.
BEAN OIL – The soy oil is leading the complex higher. The story here is linked to the crude. However, more importantly is the palm moving very quickly to record prices. This is due to the lack of stocks being built at present, for various reasons. The palm is at present the main leader. There are other problems at present with harvest in Ukraine with sunflowers. This contributes as well as the Canadian canola. The main point. The vegoil market at present has not built the stocks needed to relieve tightness. Until a shift, exercise caution.
CORN – The corn market is the weakest part of the AG complex today. Of late the corn has rallied a bit. It appears the yields are variable all over. This should confirm a current yield with a potential for a slight reduction. The market is also a bit weaker as the beans are leading a corrective charge. The weather in South America as well as acreage will be important going forward. In the long run I do believe the corn will gain on beans a bit. This pricing structure in my opinion favors beans next year. Be patient, exercise caution.
ENERGY
CRUDE – The crude continues it assault to new highs. This is a real debacle in the making. The American Petroleum INST will release data later. The issue here as many other individuals have mentioned. The US has switched from independence, to reliant. Reliance on outside forces and factors to dictate our situation. The ability to be victim to other countries regarding our energy policy, may be one of the most illogical, ignorant decisions in the history of economics and politics. I do not know where the crude will stop. However, these prices are already having a major effect on the economy and individuals most importantly. In relation to Ag markets, it does not take a scientist to know costs have and are going up exponentially. In my opinion this is man made. It seems somewhat logical to ask why and to whose benefit.
Quantify your risk.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
800-993-5449
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