Commentary: The soy complex came under selling today. The market is focused on the lack of Chinese purchases. The Chinese have issued licenses. However, the current US soy price is not the cheapest in the world. Thoughts are the buying may not start until the US price is more competitive. The Brazilian and the Argentinian currencies are continuing their decline. This will continue to allow exports at a cheaper rate than offered from the US. If the US pace fails to pick up steam it is possible that the current export estimates could be 100 million bu overstated. This would put the carry back above 400 million bu. Given the global stocks, the world is very well supplied with soy. The one question now remains as to the spring acres. The corn bean relationship at present favors corn. Will this be the case at planting? At present the oil share is at approx 32.4%, with the margins 95 cents to l.OC. It has been my belief for a bit that the crush margins will decline over time. This could be a slow grind, just like much of what we see is in the complex.
The corn is down today due to the lack of fresh purchases. The general feeling is that the export estimates are too high given the fact that the current pace is lagging far behind. The spring planting intentions are high. This will make matters worse for corn if realized. The corn numbers from south america continue to creep higher. In addition, the US price at present is not overly competitive.
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John J. Walsh
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