The Nass report today opened the door for some reasonable expectations and adds a good feeling to the markets. First the soy complex witnessed reasonable fund buying through the day. The report today added approx half a million acres. The trade was looking for a larger gain. The bean rally could extend a bit further and then sales could be recommended. It seems prudent to point out that the carry is still more than ample, in addition the global numbers will approach 100 million tons. In my opinion the govt is missing a couple aspects to the bean market. First, the acreage. There is still time for short dated bean acres. There are approx 2.5 million corn acres that remain unplanted. Given the market activity it seems reasonable that a part of those goes to beans. Second, the yield for beans, given the current weather scenario, is understated. This could change in the blink of an eye. However, it is the fourth of July week and the weather looks very good by most accounts. The main point is look for a bit more rally, a move in nov near 907 is a sales opportunity. Take the old crop stocks out with a similar move in old crop.
The Corn market, in my opinion, is the more interesting of the two markets. I see a potentially longer term scenario here. That is not to suggest that this is a cowboy run away market. It won’t be, in my opinion. However, the long term low could be in, and the seeds for an advance have been planted. The Nass report showed a 5 million acre decline from the intentions at the beginning of the season. This is considerable. In addition, it appears the Chinese stocks of corn are on the decline. A topic I have discussed. I am not wanting to make any bold predictions today. It is my thought though that the Chinese will need to purchase more US corn. It is my thought to be patient and buy corn on breaks with a quantified risk. Look for a potentially longer, slower move up than beans.
John J. Walsh
President, Walsh Trading, Inc.
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