GENERAL – The CRUDE is forging highs today. The fundamentals remain very supportive. The US is not going to change policy. In addition, the UAE indicated that the ability to raise supply relative to the demand is limited. The markets will be supported on the fundamentals and the technical outlook. The big banks, led by Goldman are predicting 140 dollar crude. EQUITIES – The market continues lower today. At present we are in a bit of a sideways range in what I perceive to be a bear market. The moderation in inflation at present may offer a relief rally. Do not get confused. Though the inflation may slow, it is only due to such an increase in the last year since Biden took office. Look for rallies as opportunities to sell. In my opinion. The cost of capital as well as outside influences will weigh on the balance sheet of most companies. The market will settle lower and present opportunities for strong companies in my opinion. Remain patient.
SOY
The beans continue to rally on demand from China. In addition, although not a current issue at present, concerns over some dryness is starting chatter. The bean market overall is off to a good start. The market is at present on pace for trend line yields. As usual, the market could build in some weather premium early. The USDA report will be released this week. The new crop needs to be watched. There should be a realization of almost 100 mmt global carry. This is significant. At present however, the market is not concerned with new crop. The old crop tightness is leading the charge.
MEAL / OIL
The uncertainty in Palm oil production, as well as large blending is supporting the bean oil market. The oil share now at 50% of the crush value. This has put the price of beans relative to meal at an all time high 1-1. The market timing will be key. The global fundamentals are still old crop supportive. Take not however price rationing is under way and will be felt in the next few months. Patience is required.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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