GENERAL – The state of the economy in my opinion is tenuous at best. There remain real concerns domestically, in Europe, and in China. The Chinese are attempting to lift the sagging real estate market through various measures. There are real long term consequences at play from China, in my opinion. The US has its own band of concerns. The interest rates will continue to rise through September. This will continue to weigh on the general state of the economy. In addition, the stock market recent rally in my opinion is a rally in a bear market. A small percentage of the overall stocks have and are carrying the indices. The global market in my opinion is in a recession.
SOY – The beans broke today after the recent rally last week. The weather is improving at a key time. This is important for yield potential. The Pro Farmer crop tour is showing yield improvement as it moves through Iowa. In addition the market is showing concern over the economic woes coming out of China. It is true that demand is a key component especially this year. The South American weather has shown improvement over the last couple of weeks. The US harvest is close at hand as well as planting in the southern hemisphere. The harvest will bring an ample global supply. At which point the market will shift focus to the acreage and weather in the south. If current estimates hold true the US global carry could prove understated, even at the second largest of all time. I have long suggested a 102-105 mmt carry globally. This is big and changes the global outlook for some time in my opinion. The world demand scenario is declining not increasing. The demographics support this as a longer term scenario.
CORN – The corn traded both sides today. The market in my humble opinion was pulled lower by the weakness in beans. The corn has been on a week long rally due to weather concerns. In addition the first leg of the pro farmer tour indicated lower yields. This is important. The move into Iowa is showing some improvement. It is my personal thought that the corn market will be more difficult than beans to show a larger crop than the last USDA report. It may be true that a smaller crop is in the works. This would shift focus to the global out put. The EU crop may have some issues. In addition South American acres may favor beans given the increase in cost. The point. Corn may be more supported than beans. The question is whether this is on a flat price basis or a relative basis. Stay tuned for the balance of the crop tour.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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