The beans reached the $10.00 level and are bouncing because, because, oh yes, yes, the Chinese are speaking with the US! The break this past few weeks has less to do with the news and more to do with the reality of the market. The government has demand overstated. The bean sales are some 200 million less. Not because of anything other than that South America dominates in this time slot. China does not need our beans today. The currency difference is also important and will keep Brazilian beans moving. The Chinese markets are stagnating as well. There comes a time when a saturation is reached and to me the signs are there. This in my opinion does not bode well for meal, meal spreads, and the crush. The commercial crushes at huge profit to their benefit while the basis tells us the market, at the least, is well supplied and most likely over supplied. This is getting bizarre. Then the funds load up record longs, push the market way outside historic norms. Perhaps I am completely incorrect. Won’t be the first time. But, I do not see the bull bean story. Use these rallies as opportunities. As always quantify the risk. Will this weather bring on more bean acres? The max yield date for corn is on us.
The corn was a nothing day as beans had a large correction. The planting progress today should confirm 25-35 million corn acres still unplanted. Will we see switching to beans? It is fair to say we have probably seen the biggest corn acreage number in the last report. This now becomes important. A further reduction starts to be troublesome for the corn carry. This, with the reduced global numbers, will start to worry the end user a bit. The corn is on a recent correction. This should prove to be enough downside. The market will need to build some premium if the weather remains too wet. Look for opportunities to quantify the risk.
It has been my contention the Corn vs Beans are on a major global shift. I am also watching the meal spreads here as well as the crush. In my opinion both are sincerely overvalued. To discuss any long term opportunities please give me a buzz at 800 993 5449 or [email protected]. The opportunities are in the long term outlook, in my opinion.
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BE WELL
John J. Walsh, President, Walsh Trading, Inc.
800-993-5449
[email protected]