I want to preface today’s post saying that, we all are entitled to our opinions in the market. No question about that. In addition, we all are wrong. The markets are difficult. Certain things I am reading are causing me some serious questions. Today we rallied due to the fact that the President has scheduled a meeting with the Chinese President. I like that. A good thing. It is to be expected that the markets can get a relief rally. Again, these are sales opportunities, in my opinion. What I am finding troubling, the rhetoric that we are only this low because the Chinese are not buying US beans. Let’s look at the facts. It is estimated that the Chinese could be 7-8 MMT behind in US purchases. Lets look at this. 7 MMT is 256 million bu, 8 mmt is 292 million bu, 9 mmt is 329 million bu. Assuming that the Chinese would have bought all those beans. The carry is expected to now grow to 1.1 bil bu. Never seen before. Let’s look at the math 1.1 – 256 = 840 million carry + record, 1.1- 329 = 771 million bu = record, the numbers don’t lie. We have record carry even if record demand. Historically beans are still too high. Perhaps we are in a new area. Perhaps the market will compensate in a different way. I can’t predict that. It is my job to analyse the historic norm plus or minus some factor for error. I am disappointed that I am reading people who know the numbers making new world predictions. Also the meal from a historic perspective is way out of the normal price zone. Oil world today did say that the Chinese are starting to cut into hog production. This could be of importance as the media in China will not talk about the African swine fever. I remain bearish soy, bearish the margins, rallies in my opinion are a selling opportunity. It is my belief we are on a large shift. If I am wrong, pick price levels where you the producer are profitable and lock in some profit.
To discuss please call 800 993 5449 or email jwalsh@walshtrading.com. All comments are welcome.
” AN INVESTMENT IN KNOWLEDGE PAYS THE BEST INTEREST ” BENJAMIN FRANKLIN
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