Commentary:
Soy
The beans have had a very significant move over the last months. The funds have built a significant position. The market has been boosted by the continual decline of the carry. The current number is 190 mil bu. This is low. The current stocks to usage is approx 4.2 %. This too is low. In managing ones thoughts I would like to say the funds can certainly continue to push the market higher. It is noteworthy for comparison that the last time the bean price was $13.00, the stocks to usage ratio was 2.6%. The point of this is with the price between $11.50 and $12.00, perhaps we have reached an area the market will struggle. This is with an open ended thought that if the weather in South America turns detrimental, then the market will have a reason for further advances. Looking down the line, early thoughts are bean acres could be up as much as 6 million acres in 2021.
Corn
The corn has had a very significant move up. The thoughts over the last months is that the carry could decline. It has, currently at 1.7 billion bu. This is ample. But, just ample. The yield has declined finally in the last report. This could be signaling a further decline going forward. What will be very important going forward is the South American planting. This could have positive results for US exports. The current trend is that the Chinese are buying way more than any prior year. This trend should continue in my opinion. In addition, the weather in China was detrimental to the feed grain production. This is contrary to the recent releases from China. The tale of the tape tells a different story. It is my thought that the Chinese will continue to need corn from the US and the world. Watch for any global disruptions to fuel a further gain in corn.
Trade Suggestion(s)
NA today
Risk/Reward
Futures-
Options –
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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