COMMENTARY:
SOY
BEANS – The market rallied today. The reasons could potentially include that the global veg oil markets have yet to ease. It is important to note that supply issues are being satisfied, albeit slower than wanted. The export inspections have picked up, and the market appears to be grabbing this as a big deal. It appears important to note that the US sales to China will be down approx 10 mmt overall. So while the recent purchases are a very positive aspect. The overall demand from the US is down in a large way. This ultimately will equate to a larger carry. It is my thought the domestic carry, baring a harvest issue will approach 400 million bu. This is more than ample. In addition the global numbers will climb to 105-107 mmt. Again a very healthy number. The point, there is no shortage of bean supplies. Only veg oils are tight and this shortly could be satisfied.
MEAL – The meal had a nothing day. The global meal market has not been strong. In fact has been the weakest in the complex. This was due to weaker domestic demand. As well as a contraction in the recent Chinese hog numbers. As well as a stated goal in China to reduce both meal and corn in the feeding ration. It is my belief that meal, while not bullish may be close to support and a minor corrective rally. The reasons are simple. The market has been weak. The crush is slowing a bit. The oil stocks are high which could lead to an oil share correction.
BEAN OIL – The market added to the share today as well as a flat price rally. The veg oil market has been supported especially by the palm oil market. This supply deficit is slowly getting corrected. There remains some concerns but easing. In addition the canola in Canada has been a driver with the short crop. This remains a problem, however the EU crop is large and being processed. The Chinese stocks of oil are currently at a 5 year high. This could ease global demand as they take a break on purchases. Lastly the Russia and Ukraine oil seed crops are up and moving to process. The ARG and Brazilian have ample beans for crush. The oil share may be close to a top.
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BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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