The soy complex has bounced a bit after the latest USDA numbers showing record carry domestically and record globally. This whole thing in my opinion does not add up. The Chinese apparently booked 500 ton of US beans. It is immaterial if they book 5 mmt of beans. The US will still have a minimum of 750 million bushels in carry. The global numbers will still be 115 mmt. That’s right folks, 115 mmt. So far beyond normal. It is not conceivable. If the soy demand is a pie chart, the whole of the demand is 100% of the demand because the Chinese start buying US beans again does not mean they will buy more. Rather the South American gets undercut. This at a time when Brazil is planting more, and the Chinese demand is waning. This is indicated by the reduction in crush margins as demand for meal declines. The Chinese are cutting animal numbers as well as using alternative feed (protein). The prices here, in my opinion, is so far from the reality of the marketplace. It is my suggestion for producers to make old crop sales as well as 2019 sales. Today Nov 2019 traded to 971.
The corn was quiet today. The slight increase from the USDA on carry gave a pause to the market. In the short term the feedgrains will be supported however, the global wheat market is a bit tight. This will offer support that should spill into corn. The corn still has a window for demand. Then the market will shift to the SA crop which will be much improved size wise from a year ago. In addition, acreage will be watched closely. I can’t imagine early seed sales would indicate a large shift given almost $10.00 beans on the board. Look for further strength in corn to make sales.
To discuss this or any other thoughts please call 800 993 5449 jwalsh@walshtrading.com
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