The markets firmed today on expectations next week the carry over could decline yet again. The Argentinian crop has been under stress and is most likely in decline. This also has been supportive. The Brazilian weather has been beneficial of late and most private analysts are predicting an increase in production. The end result is the USDA could show a slight reduction in domestic carry, with the global numbers about unchanged. The question I have is if there is a surprise for any reason. I am not predicting this. However the market is leaning heavily long. The products are supported, the veg oil market globally remains strong for various reasons. The meal however seems to have some concerns in my opinion. The ASF in China seems to be expanding. There have been a reasonable amount of sows slaughtered. This could prove problematic in the medium term. The meal spreads july/dec are beginning to weaken. This could be a tell tale. Exercise caution into the report. If long play some defense.
The Corn like beans had a strong showing today. The market anticipates further reductions in the USDA report next week. This seems likely given the overall demand structure at present. The weather in Argentina remains supportive as well as the Brazilian Safrinha crop. I am watching the July Dec corn spread. If the markets remain supportive this spread may present opportunity.
Quantify your risk.
John J. Walsh
President, Walsh Trading, Inc.
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