The market was lackluster today. The nearby beans held the 9.97-10.00 level. This may prove important in the near term. The Chinese demand has been satisfied from Brazil recently. The next 2-3 months may see a pick up out of the US. Apparently, I say apparently, the China delegation has offered the US an additional 70 billion worth of new Ag related purchases over the next 12 month period. It is my belief the Chinese do not want, nor can they afford a trade war. It is also my thought that the US will accept this in some fashion with a build over years to a more even level. This would have a near term psychological effect to the markets. Remains to be accepted. The 70 billion is not all soy, but could give a near term boost. The next numbers are supply and demand and then the acreage. It is important to note the soy ratings for the crop are at/equal to a all time high. There remains a lot of growing season in front of us. The global crush numbers are really rolling given the high crush margins. This will continue. I am questioning structural concerns in the global meal. Remains to be seen as well. Structurally the beans are at a carry. The meal is moving that way. The oil been there done that for some time.
The corn like beans held support today. The conditions declined 1% yesterday that gave us a bounce. The conditions are still way above the norm. It is too early to put corn in the bin. The growing season can turn in a heartbeat. Pressing corn shorts here to me makes little sense. The global structure today is supportive corn in my opinion. Any weather problems and we will dial in risk premium. I will not be surprised to see a small decline in planted acres. The nafta issue is overhanging and is causing concerns to the market. It is my belief that Mexico ultimately will cave on demands in some tolerable face saving fashion. They cannot afford to go to economic war with the US or Trump. The one element Trump adds is a view of not minding to walk away from the table. A much different scenario than the past. Roll over and play dead strategy that has mired the US in bad deal after deal. It is peculiar to me that the global numbers have declined to friendly, the domestic carry is back to reasonable, and the corn market is not more excited. I look for the market to still dial in some risk premium through the summer. Quantify your risk as always. The breaks in corn is inverse to beans. Breaks in my opinion are end user opportunities for pricing.
I invite all commentaries, with or against my stated opinions. Food for thought is always a positive. Thank you for all comments sent in. To discuss long term outlook please call 800 993 5449 or jwalsh@walshtrading.com
” VISION IS THE ART OF SEEING WHAT IS INVISIBLE TO OTHERS ” JONATHAN SWIFT essayist poet dean of st patricks cathedral dublin 1667-1745
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