The soy was down nominal again today. The bean exports are lagging. The Chinese are buying Brazilian. The real has moved into a position that makes it difficult to not sell into the export arena. All aspects are working against the beans at present. This trend should continue and can open the door for further declines. As I have stated, rallies are opportunities to hedge. The domestic carry is more than ample, the global stocks will climb. The global plantings will continue to make gains. The US, unless the administration makes a move with China, will suffer until Aug/Sept time period. This is historically the way it works however. It is my thought that beans equal meal. The meal demand has been good, but with more beans available there will be no shortage of meal. The door is open for further declines. The tech picture has moving averages pointing lower.
The Corn bounced a bit. The corn is gaining back on beans. The crop conditions are high. This has the market contemplating a larger crop. It is early for that thought in my opinion. In addition, the Brazilian total corn crop is approx 80 mmt down from 98 mmt last year. This opens the US up to exports. It also ensures for this season that a good crop is needed to maintain adequate supply. This break was significant and may be bottoming. It may be prudent for the end user to step up purchases. There are both quantifiable futures and options strategies that may be useful. It is unlikely we won’t have a few issues through a full growing season that cause some production concerns.
” THERE ARE RISKS AND COSTS TO ACTION. BUT THEY ARE FAR LESS THAN THE LONG RANGE RISKS OF COMFORTABLE INACTION ” JOHN F KENNEDY – US PRESIDENT
BE WELL,
John J. Walsh
800-993-5449
jwalsh@walshtrading.com