The soy was under pressure today. Modest pressure. The main reason in my opinion was the scattered showers received. In addition, the lack of a clear cut drought pattern. It is my belief the beans may have a bit more of a rally, depending on the weather. The reality remains that the overall crop conditions are doing well and to kill beans it is early in the year. Typically the time for concern will be August. The corn is in a more critical period. The Brazilian farmer continues to move beans to export channels. The estimated export tally for July will be approx 8 mmt. Again, a large amount of beans and something of concern for the US. A couple ending thoughts. The USDA will release a stocks report this week. The bean exports may be a bit overstated. In addition, it is my thought that the Chinese bean import estimates are overstated. This could prove important to the ending stocks. In addition, it is my thought as well that the bean acres will increase into the next reports. The end result could see bean carry in the 650 million range.
The corn rebounded today and had a nice day in positive territory. The market is still digesting the overall reduction in corn acres. In addition some concerns are in front of us with the current weather conditions. The critical period for corn is upon us. The USDA will report stocks this week. It is my thought that the stocks could very well be less than anticipated. This is my thought and may not be consistent with others. If this is in fact the case, it is possible the corn has put in a longer term low. As I have mentioned before I don’t look for a run away bull in corn. Rather a grinding trade higher at present. The market has a few weeks of weather concern. It is my opinion that breaks can be bought with proper risk parameters. Look at the Sep Dec corn spreads with a reasonable risk reward.
John J. Walsh
President, Walsh Trading, Inc.
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