GENERAL
The CPI was out. The 9.1 number is higher than anticipated. The ramifications of this reading are just starting to be felt. This number in my opinion does a couple things. First it reinforces the fact that the interest rates will need to continue to climb. This can be quick or over a protracted period. It’s like medicine to cure an ill. Trying to guess the Fed makes no sense especially as they have admittedly mismanaged the scenario to this point. In addition, further hikes will be a blanket on the overall well being of the equity market. The stocks on an individual basis may present value. However, overall could continue lower. This has been my thoughts for some time.
SOY
The beans are getting a bounce today after the recent weakness. The market has broken approx 2.00 per bushel. The carry is still a bit friendly in the old crop. However, the demand is slowing due to China and the Covid policy. In addition the weather has been fair. The next 3 weeks will be key to the bean yield. It is possible in my opinion the market rallies back. A rally should be viewed as opportunity to hedge. This remains my opinion as I believe the long term highs are in. The new crop scenario given the global numbers will be much different. The recent USDA report continues to show less bean acres. I find this difficult to believe. It is the posted number so it needs to be accepted. I wonder how many years with prices where they were into planting, the acreage actually declined. MEAL/OIL The oil share continues to decline. The Indonesian government is releasing exports and that is seen as bearish given the stock levels. The share now at approx 39% may be cheap enough at present. In addition the crude weakness has had an effect as well. I am not bullish flat price either product at present. However the bean oil at some point is due a bounce.
CORN
The corn like beans broke after the USDA report. The carry remains larger than anticipated. In addition thoughts that the South American will sell more corn into China is a bearish factor. It is my belief the corn has a long term high in place. In addition can go lower. However, we may be at a level where the bulls may take over for a bit given the current weather. The timing now for production will be more critical. The current dry areas, plus the current forecast can lend support to the market at present. The next two weeks may be volatile. Exercise caution.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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312-208-8836
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