A few brief thoughts regarding the markets. There remains some unknowns certainly given the global climate. However, the Chinese are buying beans. Some of this is to restock, some is the push to expand hog production to fuel the crush. Regardless, the bean market has a couple near term pluses in addition to the purchases. The USDA 395 carry appears to be a bit friendly, also, the weather is a concern this time of year and will be watched. The market may want to build a bit more risk premium. The long term may be a bit different. It is my belief the bean acres will show expansion from the recent numbers. In addition, the export estimates could be questioned. The global stocks are more than ample. The point here is take advantage of rallies in old and new crop. The crush margins in the deferred could show declines through the year. Especially if the crush pace stays strong. Down time is a consideration, of course.
The corn is interesting. The current projected stocks are more than ample. The question I have, are the acres accurate? Is the yield estimate accurate? Certainly the weather looks good, but the assumption may not be reality. The trend has already been on an upward path for some years. The last thought is the funds. The current position is overloaded short. A spark could ignite a covering rally. I say could because a catalyst is needed.
As always quantify the risk.
John J. Walsh
President, Walsh Trading, Inc.
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