COMMENTARY:
SOY
BEANS – The beans broke sharply today. The recent low of 12.05 may be the next target (march contract). While the sales this week are improved. The bigger reality is the overall exports are down. The weather in South America is improved and ample for a bit of time here. In addition the availability of Brazilian beans is greater than anticipated. The offers for December are below US values. This would indicate the US carry could see further increases. The thought I have floated, is the US carry can swell to 400 million bushels. This coupled with the global carry at 105 plus mmt is bearish. I am suggesting the market can move lower from these levels. As always quantify your risk.
MEAL – The meal was lower flat price, but gained on both beans and bean oil. The market in my opinion is not bullish. However, I have suggested that the current levels and a bit lower can offer support. The oil share was the dominant trade driving the crush. This put meal in the weakest position. The current fundamentals may be a bit more supportive to meal, especially on a relative basis.
OIL – The bean oil market has come under some pressure. The global fundamentals for bean oil are a bit more bearish than before. The palm oil market is slowly being replenished with stocks. The black sea has more veg oil available at a discount. The EU is exporting canola. The one area that remains tight is the Canadian canola situation. This in my opinion will not be the force to keep bean oil rallying. The technical picture to me looks as though bean oil could have a head and shoulders formed that could give further technical weakness.
CORN – The market had a pull back here today. This in spite of strong export sales. There is a bit of a fight here in my opinion. The corn market has some strong fundamentals. The ethanol demand remains excellent. The wheat is strong and offers spillover support. On the potentially bearish front. The weather has been beneficial overall. There may be some thoughts of increases in the corn carry in the report this November. The global numbers will now need to be watched. My main concerns and thoughts for corn is that corn should continue to gain relative to beans. This spread has shown gains and from a fundamental perspective makes sense to more. This more on a one to one basis. As always a quantified risk parameter is a must.
Quantify your risk.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
800-993-5449
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