A two sided quiet trade was the feature today. The condition ratings showed a slight improvement as some beneficial rains have been received. The reality of the beans is that the ratings are high. This creates a cushion. The yield prospects are good at present. A severe drought situation could impact the market but that is not at present likely. The beans have had some nice demand show up. This is to be expected given the discount to SA. The only buyers of SA beans at present are the Chinese. Mistakes abound here. The Chinese will eventually capitulate. It appears to me there is much more afoot than the things we see. I believe there is a real battle here that is being played out through currencies and exports. The Chinese would like to be the largest economy in the world. To the victor goes the spoils. The largest economy by default becomes very important from a currency standpoint. The Chinese would love to be considered as the reserve currency. That is in essence a global tax on all trade. We as a nation have through lax policy allowed much competition to rear and almost attack us. (These are my opinions for the record). We now are attempting to quell the attack. The past administrations were either unwilling, or unable to take on the task. It is my belief the meal is the market that still has much downside potential. It is my belief that beans equals meal. The global market is not short of protein. To the contrary, the alternative oilseeds are increasing. The bean crop is ahead of normal. This means early harvest without problems. Given the crush margins, it is my opinion, the global protein markets are not far from being oversupplied. I know this theory flies in the face of conventional wisdom. We shall see. Quantify a risk.
The Corn closed higher. As I said Friday, it is my belief we may be entering a slow grinding demand market in the corn. If I am correct, I say if, no guarantees except death and taxes, then the market could have a 6-12 month window to work higher. There is at present a shortage of corn available globally. The EU now may be in some need of imports. Certainly the black sea has been hurt given the inclement weather we have witnessed. The US is the cheap feed grain at present. This should increase exports. The condition ratings today essentially unchanged. The next week looks dry in some key areas. Perhaps slight reductions are forthcoming in the next week. I don’t want to get crazy touting a drought. The reality is the ratings are good. They are not improving, however, which will keep the domestic stocks at a tight level in the new crop. The animal numbers domestically are high. In addition, it appears the NAFTA as it relates to Mexico is moving forward. It is my belief that President Trump may go it alone with Mexico and leave Canada sit. It also appears to me the new President of Mexico will work to secure the best deal for himself regarding the citizens and not take a hard line, including Canada. These again are completely my thoughts and may not reflect the general thoughts. Lets see what happens.
” WHAT SEPARATES THE WINNERS FROM THE LOSERS IS HOW EACH PERSON REACTS TO EACH NEW TWIST OF FATE ” DONALD TRUMP PRESIDENT
BE WELL,
John J. Walsh
800-993-5449
jwalsh@walshtrading.com