Commentary:
Today was an historic day in some sense. The crude traded down to negative $40. Yes that is correct a negative. The situation dictating someone will get paid to essentially take the crude. This has ramifications on the global structure of many commodities. The long term scenario needs to be digested as rash decisions are not advised at present.
CORN
The corn was under pressure again today based on the overall fundamentals at present. The crude crashing today reminds the market that ethanol demand is not relevant at present. In addition the export pace is behind schedule with little optimism of getting on track. The planting season is under way. The question now is when will all the known fundamentals be baked in the cake. The funds continue to add to the net short position. Their stance at present is not yet.
SOY
The soy complex was under pressure again. The beans are concerned over the lack of purchases from China. It is not only the lack of purchases but also the fact that the nearby slots have been filled by SA beans. This leaves the US waiting for mid to end of summer for purchases. This could imply the export estimates are over stated. The meal remains under pressure as the Global crush margins have kept the crush pace at a high level. In addition the Arg crush capacity is coming back on line. This will put pressure on the US market through competition. The domestic planting has begun. It is possible to see an increase in bean acres by 2-3 million acres. This could eventually weigh on the deferred market including spreads. The soyoil remains weak on bio fuel concerns. This has put pressure on competitive oils as well. The Palm oil market has turned more bearish in the near term.
Trade Suggestion(s)
NA today
Risk/Reward
Futures-
Options –
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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