The soy is under pressure. The Trump administration is adding 200 billion worth of tariffs. China will retaliate. This certainly is an issue. however, the biggest issue in my opinion is the overproduction. The global production continues to expand. Given the proposed demand, it will become very difficult to draw these stocks down. I find it perplexing and almost disingenuous that with a 850-1 billion carry in beans – a number never seen before, and a global carry of approx 110 million tons – also, a number never seen before, that analysts continue to write about a bull meal story. To me it makes no sense. There will be so much protein available that the carries could swell to numbers never seen before. This with the fact that the Chinese are cutting demand and entering a reduced economic period. It is also real that I could well be wrong. I just don’t see it. It is my belief the bean prices allow for anyone to buy US beans and we are seeing record purchases presently, outside of Chinese demand. And then crush the beans due to the high margins. These margins will promote overproduction of protein in my opinion. Consider the African swine flu. I will continue to monitor this. Let’s see what happens.
The Informa company has released their 2019 estimates. There feeling is that bean acres will decline approx 7 million acres. The corn could increase approx 4 million acres. If true, this would fix the perceived (by me) production / carry issues. The corn to me has a window to move higher, yet it appears we are going to test the low from last year. The demand should remain robust. However, perhaps I am missing something as I see corn as undervalued. I have little else to say, I have beaten a friendly drum to no fruition.
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