A couple brief thoughts regarding the markets. I trust everyone enjoyed the fourth. Here we go, the desire to find a hot dry comparison. The 2021 season is drawing attention. First I would say that mother nature is truly unpredictable. Anything is possible. However, it is my thought today that the temperatures overall are normal for this type of year. And in fact will increase production. There is not a severe blocking of moisture at present. (Acknowledged this could change). There remains scattered showers that are helping areas. The current sub soil moisture levels are more than ample in most areas. Please consider the following. Although the exports are working hard, the current pace may indicate a reduction on the balance sheet. The acreage in my opinion will increase as much as 2 million acres. It is my thought that the new crop carry will be in the 600 – 650 mil bu range. In addition it is my belief the global stocks of beans will continue to increase. Approaching and perhaps exceeding the 100 million ton mark. The end point here is that the price today may be reasonable and present a hedging opportunity. Look at the Nov 20 vs July 21 as well at even money. May present a sale at these levels. Quantify the risk.
The corn to me could be the horse to watch. The market will dial in the current friendly acreage shift before the 10th. It is probable that a pull back is possible. However, the largest carry is known for this crop year. In addition the Chinese may have an increasing appetite for corn. The US is in a strong position for that business in my opinion. In addition, the global numbers could start to decline over the longer position. It is my thought corn could be at a point to buy vs beans. Positions quantified.
John J. Walsh
President, Walsh Trading, Inc.
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