Lets start with the dollar. $ There exists today a global battle for currency supremacy. The US has for a very long time controlled pricing, controlled deals, and actually has their hand in much global trade due to the fact all commodities are priced in US currency. Today as some of these countries gain more power they question why they should not have a bigger say. One way to manipulate the actual price they receive, and a way to gain advantage is through the manipulation of their own respective currency. We have and are witnessing this. The point of this ramble I suppose is that the dollar is weaker today than 6 months ago. This is by design and is meant to keep a balance on exports. Given our current growth it seems the dollar should be higher.? It will remain until the powers that be make a shift. The dollar is a weapon of the fed. I mean all of this in a positive way. Not as a conspiracy.
Looking at Corn. At present the US presents value. The global drawdown in stocks presently occurring due to South American production should not be overlooked. In addition the 220 t- 250 t shorts in the market, should not be overlooked. Now, as I said yesterday. There is no prediction of a moon shot here. Just a small orderly rally that I believe is underway and due. The corn in my humble opinion can change in perception the most with a shift in stocks, and a domestic shift in acreage this spring. A orderly rally to 400-405 basis dec should be rewarded with cash sales. One more thought. Which is part of the landscape. Everyone wants to believe in a weather market,and predict one. Already the talk for the spring planting. I want to watch the 2019 crop as well. The marketing this year and next will make all the difference.
The Soy complex came under pressure today. The leader was the meal. A break was due . The markets have dialed much premium due to Argentinian dryness. I am not a bull. However I will say the moving averages tonight, going home are still pointing up in both meal and beans. This can change sunday night. However, a dry week next week will give us a bit more rally. Any strength at or above nov18 at $1020 needs to be sold or start a hedging program. It is still to early to count the crops out. One or two good rains is all it takes. In addition, production still will outpace demand. We have gained 20 mmt in global carryover in two crop years. Crazy in a sense that beans are above or at $10.00 while corn is as cheap as it is. Lets see where we go next week
Some aspects of the market I am watching.
July Nov (bean spread), July dec(meal spread), The crush, corn vs beans, All these spreads can offer a move as large or larger than a flat price move. Risk parameters are essential. Give a call to discuss 800 993 5449 , jwalsh@walshtrading.com