The China US conversations and the tariff suspension sent the market soaring. There are some real concerns here in my way of thinking. Not in the market place, but in the rhetoric written about the market. We have a huge carry both domestic and globally. To read the articles hitting the market you would think we had a tight global scenario. There is such a concerted effort to create a bullish bean scenario. The Chinese cancelled beans last week – one million tons, 36 million bushels. Where does that go? Well it should go to the carry. However, that is not the conversation. An individual can go back to 1970 and not find US and Global carryovers this stout at the same time. Especially with $10.00 plus beans. Yes, demand is big. But it needs to be. And I am sorry, but the Chinese will not buy 50 mmt of US soybeans because we delayed a trade war. In some sense, this is irresponsible commentary. If the Chinese did buy 50 mmt of US beans, the global numbers would swell to levels not sustainable. There is no sense of reality here. The price will dictate demand. The markets can continue to rally, don’t misunderstand me, based on fund activity. But, from a real perspective, this is getting bizarre. Three seasons ago there were 58 mmt globally. Please check the historic numbers. Now there are 92 mmt. It is my belief the Chinese are slowing and stagnating. To the producer rallies like this and further should be used as a hedging opportunity. As always quantify your risk.
The Corn just sat today. The beans held the glory. The weather remains wet. Crop progress will be important today. The market cannot sustain a weather issue now or in the future given the global scenario that was verified in the last usda report. A rally in corn to 440-450 presents a hedging opportunity for the producer. The next question will be the global acreage as it relates to feedgrains relative to oilseeds.
“WHAT IS RATIONAL IS ACTUAL AND WHAT IS ACTUAL IS RATIONAL ” G W F HAGEL – PHILOSOPHER WHO THOUGHT OF IDEALISM
BE WELL,
John J. Walsh, President, Walsh Trading, Inc.
800-993-5449
jwalsh@walshtrading.com