Ag Macro

John Walsh Grains Leave a Comment

The Soy continues its rally based on weather. The general belief now is that south America is under a La Nina scenario, which if true, could bring dryness to much of Argentina through the spring. some of this is speculation but the chance is there and has the market thinking. It is estimated funds bought beans as much as 8,000 today. They were also large buyers of meal as well. The oilshare is now in the 32-32.7 range. This will continue lower if the weather profile remains. There is now a opportunity for the acreage next year to expand given the bean corn price relationship. As much as 2-3 million more acres are possible. This would really push the bean stocks to a huge number. The global numbers continue to swell. Given the current export pace and the prospect for further advances, producers should consider this a rally to take advantage of and start to hedge.

The corn remains lackluster as the domestic carry offers resistance. The fund position is huge. This position ultimately will be a positive for a rally. The global scenario is shifting. Informa estimates that the Brazilian crop is 6 million tons less than the USDA has penciled. Now if the US market looses 2-3 million acres next year,The market has something to consider. It is difficult to turn the scenario real bullish, but friendly enough to spark a short covering rally that would force the funds out. The positions could force a 25-35 cent rally. This price zone presents some potential opportunities for the producer.

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