The beans started lower on the day, then rallied due to the meal leading the charge. Beans will follow until meal has put in a high. The main reason for the rally is a concern over the Argentinian meal program due to the drawdown in the bean production. This certainly is an issue. However with the extra carry the US has and the increase in production in Brazil, it has been my contention the world will be supplied. This is a hedge play and does need to be respected and utilized. A rally back towards $11.00 should be used as an opportunity to sell more new crop beans. The oilshare now is at approx 27%-28%, this is the lowest level of late and certainly in a long time. The global oilseed market is amply supplied and will stay so, especially as the crush pace continues at such a level. The high priced margins are offering a windfall to the crusher.
The corn market continues higher. We have spoken about the reasons here for some time. The drawdown in Brazilian crop needs to be watched for further export opportunities. The domestic market, due to a reduction in planted acres, will be on edge for any weather issues or planting delays. The long term corn price structure looks constructive, and with the right scenario could trade into the 450 level. This would present a sincere hedging opportunity. At present, remain patient in corn with an eye on the upside potential. Quantifying your risk, as always.
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“SECURITY IS MOSTLY A SUPERSTITION. LIFE IS EITHER A DARING ADVENTURE OR NOTHING” – HELEN KELLER
John Walsh, President, Walsh Trading