AG TIME time to watch SA

John WalshGrains

The soy complex up today led by meal. The reason Arg placed a export tariff on ag exports. In my thought this was something that was dialed into the market some time ago. We traded a summer market with argentina in decline due to weather. It was discussed at length by every analyst that the argentinian crops would cause China to buy more US and Brazilian beans. Lets look at what has transpired. The Brazilian has supplied the beans. The US very little. The Chinese have reduced their import estimates substantially. The Chinese have sought alternative protein sources. I am not sure why analysts want to always focus on what will drive the market higher. I am not sure why the funds want to remain long meal with a record global carry,and more importantly the basis levels saying there is absolutely no shortage anywhere. I am not sure why the analysts are not focused on the African Swine Fever in China. The eighth case was found this weekend 6-8th cases. The Chinese now are restricting the movement from any province that has the flu. What will they do with those pigs? How many total animals does this take into account ? Today ” CHINA AG ” said “pork could come to a total stand still. It seems there will be a cull here. The estimates range from 10-15% of total numbers. That is alot of pork. That is alot of feed consumption. This fact if realized. I say if because this is a dynamic changing environment. If realized is a global protein game changer. I would rather be out of the soymeal complex and sit tight rather than be long.  Now, I may very well be wrong.  It is not a uncommon occurance. However, there appears to be to much demand risk here. Risk that demand goes away. On another insight. The Brazilian is planting beans. Just getting started. The market will watch closely. The estimates are for a potential 3-5% increase in production from last year. Big numbers if realized.

The Corn lower to start. The black sea has yet to suspend feedgrain exports. This weighed heavily. It may be a bit early yet as the exportable supplies are still available. This fact will be short lived. Perhaps the market is saying show me before I react. Just a thought. The corn charged back late. This was a show of strength. The USDA numbers are anticipated. Is the US crop a bit overstated ? Is demand understated ? Both important questions that will have a impact. I remain friendly corn given the numbers. A friendly report would assist in a possible move back above $4.00. Obviously there are no crystal balls,so quantify your risk

I hope the long holiday was enjoyable. Many thanks to everyone we interact with on a day to day basis. In addition the comments are always appreciated. 800 993 5449    jwalsh@walshtrading.com   If anyone would like to discuss.

” BUT MAN IS NOT MADE FOR DEFEAT, A MAN CAN BE DESTROYED BUT NOT DEFEATED ” EARNEST HEMINGWAY

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