AG TIME – Leveling the Playing Field

John Walsh Grains Leave a Comment

A brief look at the outside markets (outside the AG).  The dollar continues to exhibit strength. I have said for some time I believe this trend will continue. The US is back in the CAT BIRD seat. The dollar is solidifying its dominance. Too much strength now, however, does not help the grains. The bonds have bounced off the lows. It is my contention rates are on the rise. These rallies are opportunities to sell, in my opinion. The stock market to me at these levels is not a good indicator of the well being of the economy. A correction is not a terrible thing, if it comes.

The soy is under pressure. This theme will remain until such time the market reaches a level that buying shows up. That could be awhile. The fundamentals are known. Huge supply, diminished demand. My concerns are deeper. The global market is shifting. More supply, reduced demand. Alternative protein sources. There is a reckoning in the protein, and the crush margins in my opinion. The Chinese are doing what they can to reduce demand. The market is not paying enough attention to the African Swine fever. The media is dark on this there. That is not a good sign. The disease is spreading. Thus far only infecting mostly smaller producers. It appears to me a matter of time until someone big is bothered. That is my opinion.

The feedgrains are under pressure. As I mentioned yesterday, I don’t think wheat is in a buy situation yet. There is no panic yet in the Black Sea. Prices have not spiked. The US exports are trailing the estimates by a fair amount. This creates a weight on corn. The corn is the one market that could still have a nice move up if the govt nov report shows a decline in production. The wheat can also, but may run out of time. A long position can be covered with options to mitigate the risk.

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John J Walsh


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