SOY – The Beans and meal under pressure today. This could be the start of a new trend. The beans have alot to deal with at these levels in my opinion. The Demand is questionable and behind. The Carry is large at 550 million bu. Weather the Carry is 525 or 575 is immaterial. There are alot of beans, despite record crush and solid domestic demand. Now comes the Weather. The forecast remains wet and cold. The acres in some areas will switch to beans by month end. In addition there will be spring wheat acres that shift to a new row crop. beans may be favored. Assuming 1 million more acres than the USDA puts beans in a difficult situation. The demand is a question mark. Not only because of the tarrif threats. The Brazilian will do whatever is necessary to gain market share. The SA crops next year could be up 20 mmt. I cant understand why with prices this elevated, the stocks both domestically and globally where they are, and the funds long 170 t contracts, what there is to be bullish about. The meal, well it appears meal demand is less than anticipated. With Margins where they are the whole world will crush whatever protein they can. There is no shortage of any oilseeds. In General. The 2018 and the 2019 prices still present opportunity. The 2019 above 10.00 last week was a opportunity. Quantify your risk of course. It is my belief,for a bit of time now, we are way overpriced and the market will eventually come back to a more historic price relationship with stocks. No sure thing though, except death and taxes.
Corn – The Corn is correcting of late as expected and written about. A break in dec 18 to 400 presents value at present and should be watched by end users. The weather will be a friend to the bull. Especially if we re,ain wet into the month. This could set up a significant shift in acres that will favor long corn short beans. We are not quit there but perhaps close. The corn market is flirting with 1.6-1.7 new crop carry. A decline of 1 million acres is a 1.4-1.5 carry. This would get interesting and require a good season of growth. Now the world stocks have drawn down 30-35 mmt. There is no shortage globally but a bit interesting. This could shape up to be a year where corn becomes the leader of the complex for various reasons. As always risk is high, have a plan of attack with measurable risk perameters.
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