The soy complex under pressure. The rhetoric will have us believe it is due to the tariff situation. Perhaps. However, there is much to consider. The global soy production is going up. The demand is waning. The title do we have separation refers to the bean corn relationship. Perhaps a sea change. It is my belief the global shift has begun. I am not here to predict how long it can last. Rather that a change is upon us. The Chinese will take many less US beans. In general they are buying less beans globally. True to form the predictions of 103-105 mmt imports next year are way over stated. The reality is China has a hog sector that is struggling with overproduction. This is their chance to cull. And being the traders they are, cull they will. This will change the flow of protein globally. As has been my contention for some months, we are on a shift in protein demand. This ultimately will change the global crush rates. There are a lot of spread relationships in both the oil and meal to look at. Long story short. The condition ratings came in down 3%. This may give us a rally tomorrow. The market could rally into the report a bit. Look for a 2 bu per acre in beans increase. This is important. Rallies present opportunities for the producer.
The corn was up a penny. The wheat offers support. The beans struggling. The condition ratings declined 2%. Informa predicted a 2 bu increase in the final yield. If true, this will not add to the carry. The exports are most likely understated. It is my thought the NASS report will show corn up 2-3 bu per acre. This does not change the domestic carry. The global numbers are tight. The feed grain scenario globally looks to tighten further. The corn can continue to grind higher. Many are looking at wheat for guidance. It is my contention the corn fundamentals stand on there own. Given the domestic stocks to usage, given the global stocks to usage, we are undervalued.
I have received some very nice comments of late. Much appreciated. I offer my thoughts as a “food for thought” type of commentary. We are all attempting to climb a difficult hill. To discuss please call 800 993 5449 or jwalsh@walshtrading.com
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