The USDA report confirmed a record bean crop. The question now will be the demand side of the equation. Especially as it relates to China. To recap the bean carry is estimated at 845 mil. The potential exists for further production increases with a good finish and easy harvest. Lets consider some long term factors. A agreement betweethe US and China will happen. The question I ask is what does it really change in the long run. Consider that the Chinese are now cutting demand. The livestock sector ,pork specifically was suffering losses. This was due to overproduction. It is my belief the African swine flu will allow them to ease out of some of the numbers. This will change demand for awhile. Theyare estimating 83 mmt of bean imports. The usda is still at 94 mmt. I have said for some time the numbers are just not going to happen as the USDA says. It was way overstated. Another consideration is the effect the trade war is having on protein The Chinese will purchase sun meal from the blk sea for $230 per ton. In addition there is a trade delegation in India to work out details to purchase rape and soy meal. There will be a shifting of demand away from US meal. The protien market is over valued in my opinion by a bit at these levels. remais to be seen. However the funds continue to hold a net long position. Watch the veg oil market which may find its sea legs at these levels. I dont expect a appreciation but rather a stagnation of price for the bean oil. lets see.
The Corn took the yield increase hard yesterday. Given the numbers there is a ample amount at present time. However it is important to note that the USDA only raised the exports by 50 mil bu. It is my belief, given the current availability,given the current cash price that US corn will maintain a solid export base. This could indicate the exports could go up. The world will eye the southern hemisphere planting. This will be important this year to build back stocks. The 2017 lows are not far off this should offer some support as well,given the tighter global make up.
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” BE CONTENT TO SEEM WHAT YOU REALLY ARE ” MARCUS AURELIUS