The beans rallied again on the tight carry, concerns over South American rain totals, and scenario. Regarding the Chinese demand, there are a couple of things to consider going forward. The beans and meal have been the upside leader. The meal may be separating from the beans. This could signal a top if only temporarily. The global bean demand is fueling a record crush pace, given the margins. This ultimately could pressure the meal as the main demand is for the beans. In addition, the bean oil usage is running at a blistering pace. a record of late. This should continue as the bean oil globally is carrying a large part of the demand as palm oil stocks have drawn down in a large way, for various reasons. The replenishment is a bit down the road. It is possible that oil share could continue to gain. The spreads worth watching are the oil and meal. The bean oil spreads are on a large inverse. This could continue (quantify your risk). The meal spreads in the new crop are inverted. I am watching this closely for a top in the spreads (quantify your risk), It is important to not lose sight of the significant price appreciation. From a producers perspective this should present hedging opportunities at present and into 2021.
John J. Walsh
President, Walsh Trading, Inc.
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