This could be a very interesting week and month for the ag related sectors. The govt reporting agencies will start releasing numbers that were affected by the shutdown. There is much to consider at present. The Chinese have kept their word and have added additional soy purchases. The question remains for the soy complex – does this really matter? The export pace is still behind the govt projections by quite a bit. In addition, now, the feeling is that the Argentinian crop is actually getting larger, which will help with exports. One other item to consider is freight rates are dropping. An indication of global availability. The global slowdown is cutting demand. These are longer term trend changes in my opinion and thoughts I have been expressing for some time. It feels to me that the market is speculating on a possibility for something so significant that the market will stay strong. The fundamentals do not justify the price in my opinion. In addition, the current bean corn relationship does not increase corn acres to the dramatic amount needed to make beans friendly. This higher board of late should be rewarded with sales. Consider the 2019 and 2020 crop years as well.
The Corn is a sideways market. The thought that China will purchase feed grains is important if realized. This fact could give corn the friendly boost that is required to move to a higher level. The corn carry is a bit friendly as I see it. The acreage is important and will be needed given the solid demand. The corn could be on the verge of one more nice move before quarter end in my opinion. Perhaps 425-435 basis July futures. The reports this week and month could play an important role as well as the crops in the Southern Hemisphere.
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