The USDA report confirmed a further tightening of soy stocks. The projected carry now at 140 mil bu. This is significant. The question going forward is the Arg crop. The Brazilian crop at present, according to the USDA, will remain at 133 mmt. In fairness the weather in Brazil has been relatively speaking decent overall. The Arg weather has been less than ideal and remains so. The US has certainly benefited from this fact of late. A suggestion to producers. The market has been on an historic move. It seems prudent to take profits on old crop soy stocks at these levels. In addition, it seems prudent in my opinion to take profit on new crop production at these levels and higher. The market looks bullish at present. The question I have is will the Chinese need the same amount of beans in 2021 as in 2020. My thought is no. The buying is due to the hog replenishment. When markets change they change quickly as we all know. Exercise caution.
The corn continues to move higher. The USDA report yesterday was important because it confirmed both lower production and lower stocks. This will prove important as the global numbers now will be watched ever closely. The production globally is under some pressure given the current weather situation in ARG. In terms of the domestic production, the US numbers now are important as corn cannot lose acreage to beans. The need to produce a large corn crop has increased. This will keep a floor under corn. Also, I continue to watch July Dec corn spreads. They have gone from 12 over to 71 over today. It does seem prudent to make old crop sales at the 540 level. The market it seems can move higher. However, this has been a significant move.
John J. Walsh
President, Walsh Trading, Inc.
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