The markets are down in the soy. I am tired of talking about the rhetoric. It is my belief we need to focus on the numbers and that should over the long run have an impact on the price. Looking at the reality of the bean market, the USDA has estimated a 580 mil bu carryover (RECORD). The USDA will release a new estimate on the 10th. The estimates that are coming out this week from private analysts are looking for a 2-3 bu increase. Do the math. A potential 700-800 million bu carryover (BEYOND RECORD). Even with the tariff situation solved, I do believe this will be the case. The bean market is so oversupplied it is going to be very difficult to change the dramatic course. It is my belief this needs to be addressed as the reality. The things I read want to look for reasons to blame someone for the price. The truth is the numbers are bearish. Very bearish. These types of scenarios take time to rectify. The market that I believe is the most expensive one is the meal. In my opinion, it is very over priced at these levels. The ample supply of beans ultimately creates meal. We will be burdened with meal at some point. The Argentinian will start exporting meal in Sept/Oct. The next cycle in South America will show a rebound in availability of beans. The competition will be fierce, in my opinion. A rally now deserves attention. I am hoping a rally can transpire to give the producer another opportunity. Please be aware of the Nov 2019 prices. I pointed this out a couple days ago. There is no magic crystal ball in this business. I must say, the numbers are really going to stack up and this can’t be ignored.
The corn rallied early then eased back to settle higher. The feedgrain scenario globally is tight at present. The EU has some real issues. The Australian crops. The Black Sea. The numbers are getting tighter. This will create a short term availability issue. The US is, at present, in the cat bird seat. We are in a position to export corn to meet the needs. It is my belief this is a 6 month window until the markets can begin to solve the issue. The markets in both Wheat and Corn will look to seek a higher level, in my opinion. The Aug 10 report for corn becomes very important. Under the current balance sheet the exports are under estimated. The question becomes the yield. Private analysts are estimating 2-4 bu increase. This is important but, would still leave the carry around the same range. It is my belief we are heading to 410-420 basis Dec corn. The wheat has some more upside work to do. As always, quantify your risk.
I appreciate the comments regarding the blog. For a conversation please call 800 993 5449 or jwalsh@walshtrading.com. I attempt to identify longer term trends in the marketplace.
” ALL MEN CAN SEE THESE TACTICS WHEREBY I CONQUER, BUT WHAT NONE CAN SEE IS THE STRATEGY OUT OF WHICH VICTORY IS EVOLVED ” SUN TZU
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