I was looking at the charts today and reading a few articles. It is true the markets have been in broad ranges for quit some time. The soy to me has traded on borrowed time. The market has been held up and bounces off of support (seemingly always) based on fund desires and a hope that something bullish is out there. I can not find it. The exports are way behind, the chinese purchases are on the decline. I dont see the relationship on the board that will drive away bean acres. This may be a surprise to the market in the USDA outlook forum. The market has had a couple friendly inputs. The Crush margins are one. The crazy high margins (my opinion) have kept the crush pace at or near record. Well, the chinese meal is trading at multi year lows now. Due most likely to the curtailed meal demand from swine flu. This also in my opinion is not dialed in. What happens when meal backs up and the margins tumble and the crush needs to slow. This is coming in my opinion. (time to watch oil spreads, perhaps) Then we have slow exports a declining crush and huge stocks. There are many structural issues here that need to be watched wishing and praying are not trade ideas in my opinion.
The corn had a slight rebound. Wow corn bounces in a begrudging fashion. Difficult for me to understand. The President is making open promises in the way of purchases from China. If this materializes, a big positive. Then if the acreage increase for corn stays modest. ( It is my belief that will be the case) Then this market has a story. A carry with good weather of potentially 1.4-1.55 billion bu. This is not a $3.50 board number. Rather some risk premium should be built in. Dont loose sight of the fact that the exports are a healthy clip past expectations. The Ethenol margins are solid,Also, animal numbers are big domestically. There remains a optimistic view on corn in my opinion. Corn has been the follower to beans for some time. Perhaps the next 12-18 months corn will have a turn in the drivers seat.
800 993 5449 jwalsh@walshtrading.com I appreciate all feedback . Give a call to discuss opportunities/risks through the year.
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