COMMENTARY:
SOY
The USDA chose to leave the current balance sheet in place essentially. They reduced the global numbers in a modest fashion. The market has held sideways to firm with a stronger export pace through November. The year on year is still down and looks to continue a down trend in dec with the Brazilian harvesting some early beans. This will prove important in my opinion regarding the domestic carry. Demand lost is gone. The point, the market will still watch the current South American production, which could still spark a near term rally. However, the global supply burden in soy is real.
MEAL – The meal has taken over the leadership and gained approx 6% on bean oil in the last couple weeks. This move was significant. The meal has in my opinion reached some upside targets and may be running its course, unless further dryness grips South America. The 380 a ton area basis dec was a target. The meal fundamentals also were a bit friendly of late as well as a general exit of the meal oil spread. A fresh look is warranted on Monday.
BEAN OIL – The bean oil market has failed considerably over the last two weeks. The oil share was over done after targets were reached. The domestic market saw stocks climbing to ample levels. In addition a healthy crush pace contributed to recent weakness. It is my feeling that this break of approx 6% in the oil share is enough for now. At present the US is a cheap bean oil option. It appears that pricing is starting and purchases are under way. The palm market has yet to build significant stocks at present. This as well as the Canadian canola concerns. These thoughts may be ample reason for oil to find support in my opinion. This move may not be over in the long run. Exercise caution in the short run.
CORN – The corn report was a nothing event. The market has a strong demand base built with the ethanol demand. The overall export market is strong with Mexico a large buyer of late. Actually record for some periods. This is significant. The corn in my opinion while just amply supplied could still turn friendly. The weather is pause for concern in the Brazilian first crop. If harmed this could have a positive effect for the US. I will watch the march and may corn versus the dec. This may be an opportunity other than flat price with a quantified risk
SPREADS
BEANS – watching the july 22/nov22
BEANOIL – short ,The July22/dec22 has moved from 200 over to 34 over . look for a rally to sell
CORN – march22/dec22 buy at 40 with quantified risk
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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