John Walsh General Commentary

The bean oil continues its dominant performance. This could temporarily run out of steam given the recent gains. It is important to note however that it typically doesnt pay to predict tops or bottoms. It has been my thought that the oil share would move to the current level. Longer term 38-40% seems possible IMO. There are many dynamics and the market is awaiting the Chinese deal ratification. In addition the hope that new purchases are made. The meal continues to suffer with the ASF concerns globally. This is more than a concern, rather a real reduction in pig numbers that will create a issue for a bit of time here potentially. The current oilshare is 36.8% (H) The margins on the board are 105. The margins in my opinion will present a opportunity for a sale. (quantify risk) The long term presents margins to crush for. In addition the SA situation will promote increased crush with potentially more exports of the products. This could keep bean demand steady while the relative crush value comes under pressure.

The corn has put a base in and is slowly grinding higher. It is my opinion this trend while perhaps slow could continue. The fundamentals remain ok , however some changes could assist. If the USDA reduces yield further this could be supportive. The big question of course will be what will China take in the way of feedgrains. Specifically corn for this purpose. The estimates could, if true create a scenario where corn stocks are reduced by 300-400 million bushels. Last, and this may be a fantasy. If , and I say If the chinese experience a bug issue with this years crop. There are predictions this could be a scenario. This of course would be a major game changer. In addition it would give a look at the reality of the Chinese corn stocks, which are approx 2/3 rd of the global carry. It is IMO possible without the latter that corn works its way back to 405-410 basis the march. This would present producers with a opportunity in old and new to make some sales.