The soy was led higher by the meal today. The Brazilian government has lifted import taxes on both corn and beans. The strong export pace has now worn down the domestic supplies. The internal prices are now increasing. The US meal has been the upside leader. The market flat price, as well as the spreads, has shown a large move. It is my thought that it is important now to consider where we are historically. The meal on a relative basis is very highly priced. My question going forward becomes, are there as many hogs domestically, and what substitutes are cheaper priced. The old thought is hogs don’t eat $400 meal. Not there yet, but keep an eye out for a reason to cap the rally.
The Corn continues to move higher. This market, in my opinion, may still have legs. The corn is due a set back at any time. However, the Chinese prices are indicating problems. In addition, further delays in the southern hemisphere bean planting will only lend support to corn.
Quantify your risk.
John J. Walsh
President, Walsh Trading, Inc.
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