The beans have marked a near term low. This rally will present another selling opportunity. However, be patient. The funds are short and some fears over weather are necessary. They are not realistic in my opinion but necessary. It means little if the carry is 580 or 520. There will be a record amount of beans available in the world. I find the economic meetings bizarre. With the Senate. The trade wars are the main topic. We have come out of a period in AG where there has been unprecedented growth and domestic AG wealth created. This is all a good thing by my way of thinking. However, it is foolish to believe this will continue year after year. If one bad year will rock the AG community then costs are too high, including rented and loaned ground. It is my belief we are starting a new phase. Overproduction could be the norm and back to markets of old where rallies are sought after. This also creates a sharper marketing scenario. Survival of the fittest. The market tends not to bail people out in this type of setting. I don’t hope for this. I am just being a realist and looking at the numbers. In the short run the demand for beans has picked up. Due to the huge crush margins. In some cases this will displace meal demand as countries take the beans to realize the margins. Another reason to be cautious of the bullish rhetoric is meal. The Argentinian had old crop stocks, they are importing many beans. The Brazilian crop has gotten bigger. This, with a growing domestic carryover. In my opinion beans equal meal.
The Corn acted good. I look for more upside. The crop is being rushed to maturity. There are some weather issues. Both do not necessarily bode well for yield. The corn yield will be ample. However, this year ample won’t do it for corn. The carry is tight. Especially the global numbers. Given the continued weather issues around the globe the US will be in a pretty good position for 6-12 months. At present over 30% of the US rates are under drought. Almost 70% of the crop is pollinating. This should spark some concern.
“IT IS WRONG ALWAYS, EVERYWHERE AND FOR EVERYONE, TO BELIEVE ANYTHING UPON INSUFFICIENT EVIDENCE” – W.K. CLIFFORD
BE WELL,
John J. Walsh
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