The USDA will release estimates this week. The average guess appears to be looking for a bit of a reduction in yield, due to the wet weather. Perhaps this will be the case. It is irrelevant. The beans are so plentiful. It is my thought that the most important aspect of the soy complex today will be the meeting between Trump and Xi. Regardless of carry, supply, etc, a deal will bring a sense of optimism and could offer a rally in beans. It is also my belief that rallies are meant to be sold given the current make up of the long term market. The Chinese demand from a macro sense is declining at worst, stagnating at best. The global production continues to expand. It will be interesting to see what product holds up the best with a deal. It is my thought that more bean sales will equate to more crushing. Given the global protein supply situation, I am not bullish the meal market. It is important to keep a eye on the African Swine situation playing out in China. In addition, China’s move to reduce protein in rations. It is estimated this over time could reduce meal use by as much as 10 mmt. Remains to be seen obviously. However, the trend is a declining one.
The Corn continues to show strength, taking a little bit of ground every day. The weather has possibly had an impact on yields in my opinion. This could reduce the corn carry to a level that makes some uncomfortable. There are so many considerations in corn. It has been my belief we may attempt to make a move to 410. The question then becomes the US corn vs bean plantings? Unknown really because the wild card is the tariff. If that is lifted then beans may rally changing the planting theories. My feeling is this will transpire before the spring. The corn can rally into the USDA report this week in my opinion. Then a fresh look with the numbers.
Thank you for the comments. Please call or email to discuss long term outlooks and ideas. I typically try to focus on longer term trend ideas. 312 208 8837 or jwalsh@walshtrading.com.
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