Commentary:
These comments are offered pre report. Tomorrow the USDA will release the supply and demand estimates. There are a few considerations. The Chinese are purchasing beans at present. The US has moved into a position where beans are now a bit cheaper than the competition. This could hold true for a bit depending on currency valuations. The estimates for old crop carry are 488 mil, and for new approx 430 mil bu. Both are ample. However it is early in the season and the market has no risk premium built. It is possible to witness a rally if the numbers are a bit smaller. This could allow for hedging opportunities IF it occurs. The planting in beans is running well ahead of the averages. The weather overall is neutral to fine. The crush margins continue under pressure, this could be the long term outlook given the ample product availability.
The Corn market awaits the USDA report tomorrow. The pre estimates indicate ample old crop supplies. If the current acreage numbers are used then the new crop carry with beneficial weather, could swell to 3 billion bushels. It may seem odd, but it is my thought that the corn may have placed a near term bottom. The tech trade has the funds short now approx 200,000 bu. If, and I say if, there are any changes or the corn carry is less than advertised, a short covering rally could ensue. The Chinese have been purchasers of both Corn and DDG. The market has been in a long decline, let’s see what tomorrow brings. As always quantify your risk.
Trade Suggestion(s)
NA today
Risk/Reward
Futures-
Options –
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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