The Argentinian strike continues. Approximately two weeks in at present. This is having an impact both real and perceived. The products both meal and oil continue to perform. The meal more related to the strike in my opinion. The strength here may continue until the strike is resolved. I have no insights or predictions related to this or the timing on a resolution. The meal could be the most at risk to a correction if the strike is resolved. The vegoil markets remain very well supported globally in general. This bodes well for soy oil. It is my opinion soy oil can remain well supported. It is also my thought that the bean oil relative to beans and meal in the long run can make gains. This is not necessarily the case today. However, the oil share could experience a move higher when meal weakens. Consider the bean oil spreads. The Jan July breaking out to new highs today. The meal spreads are performing as well. I don’t have an appetite to trade them though. The weather remains a key feature with Brazil receiving needed relief. The Argentinian weather remains too dry. Private analysts are reducing potential a bit. Also Paraguay looks to be a bit smaller this year as well. Look for the market to remain supported in general. A strike agreement could bring a quick correction. Caution advised.
The Corn market remains supported. The domestic fundamental picture has been friendly. The global picture remains supported based on weather issues in SA. In addition the Chinese feed grain needs are on the rise. It is my opinion that this is a shift that will last until at least next year. The Chinese needs will be paramount. It is a possibility that the Chinese growth in feed grain purchases could show a greater growth than in soy (My opinion). I am watching the July 21 Dec 21 corn spread. This is currently at 24 over. This is up from 12 over recently. If the Chinese needs are as great as some predict, the US will need to grow a large corn crop this next year. It is my thought corn and spreads will remain supported. As always quantify the risk.
John J. Walsh
President, Walsh Trading, Inc.
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