COMMENTARY:
SOY
BEANS – The bean market has remained in a sideways trade of late. The medium term outlook could present a declining board based on a couple factors. First, the harvest could offer some pressure. This is not due to a large domestic increase in carry. Rather a replenishment of stocks that allows for a cushion until the South American production potential is better known. The second and perhaps more crucial is the fact that bean exports are lagging in a fairly significant way. The South American availability will ultimately be the price driver in the future. The market now will shift its focus to the south American weather. The potential for La Nina. We shall see.
MEAL – The meal market has been the weak link of the soy for some time now. The oil share was the driving factor behind the crush. This reality may be coming to an end. The meal in my opinion is finding some support in this 330 dollar per ton level. I don’t look for large moves up, but rather some support and a bit of relative strength. This thought is in the infancy explained a bit through the bean oil.
BEAN OIL – The bean oil has bounced approx four cents off the recent lows. This may be enough. The oil share is cooling down in my opinion and rallies may present opportunities to sell. The global markets in veg oils are starting to be replenished a bit. Excluding Canada where the canola stocks are decimated. The stocks over the next 6-12 months should overall, without a unforeseen weather event , continue to build. This could slowly pressure bean oil prices. The key here will be the South American crop as well.
LIVESTOCK
HOGS
The hog market has perhaps marked a low after recent weakness. The Hog and Pig Report on Friday confirming less numbers. This is important as the ability to build supply could be limited in the near term. The Chinese also are slowing growth in the near term. This will continue to place a important focus on demand going forward. The Chinese remain out of the import arena. The growth they have seen in the overall supply is helping stabilization.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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