COMMENTARY:
SOY – The USDA supply and demand report today held few surprises. The old crop carry was left unchanged at a tight 135 million bushels. The new crop carry was estimated at 155 million bushels. This still is a friendly carry. The question on the domestic front now is how will the remainder of the growing season progress. The weather is paramount in the near term. Looking at the long run, it is important to note that the global numbers continue to increase. The estimate today puts the global soybean carry at 94.5 mmt. This represents a 1.9 mmt increase. This is a very ample carry and in my opinion should be viewed as such. The Brazilian and the Argentinian stocks are reflected higher as the Chinese demand is starting to decline. This will put both countries in a strong export position in the medium term. The near term remains supported, mostly on the back of vegoils. This, in my opinion, may continue a bit longer. The oil share can trade above 50-52%, as I have predicted in the recent writings. It is my belief unless the weather turns severe again, the highs may be in beans and meal. The bean oil however, may attempt another run with the correct circumstances. As always quantify your risk.
CORN – The corn market had a strong showing today. The old crop stocks were reduced 25 million bushels, keeping the old crop position well supported at present. The old crop also finds support with the fact that the Brazilian second crop has dealt with problem after problem this growing season. This of course opens the door for more potential US exports . No guarantees however. The US new crop is raised based on larger planted and harvested area. The corn market is entering the critical pollination period second half July, beginning of August. This fact may be enough to keep the market supported. It is important, in my opinion, given the carry, that a reasonable large crop come in. I continue to watch corn spreads, any issues may put a bid under the old vs new spreads.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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