The soy complex can be looked at in two separate ways in my humble opinion at present. First, flat price. The beans and meal remain near the recent highs. In reality at high levels relative to the stocks, as the way I see it. This lofty price is due to the exceptional purchase pace with Chinese buying. The Brazilian is essentially sold out while the Argentinian won’t sell due to currency issues. It makes more sense for them (ARG) to hold beans as the currency becomes devalued. The second way to assess the soy complex is through the spreads. The meal spreads are inverted, bean spreads are attempting to invert. If the situation in South America remains, and the weather remains dry. The bean spreads could invert, and the meal should continue with a larger inversion. These thoughts are predicated on the weather of course. The bean oil did invert for a short period. The recent trade is showing a carry sell going home. It is my opinion that perhaps beans have a bit more upside. However, it is not necessary if the spreads perform their function. Quantify your risk.
John J. Walsh
President, Walsh Trading, Inc.
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