COMMENTARY:
BEANS – The beans rallied today for a couple reasons. The weather in southern Brazil is turning more hot and dry. In addition parts of Argentina and Paraguay. The reality at present though is the majority of the Brazilian crop is in very good to excellent shape. As well as an abundance of old crop stocks. This however is not the current market driver. The bulls also are looking at the recent sales of approx 800 t mt. Some of which is to China. The US here again has a finite window to sell. The Brazilian will have a crop as early as end of dec getting harvested. It is clear at present the market is focused on the more bullish scenario. Look for rally opportunities and exercise prudence.
MEAL – The meal market is gaining market share back. The market reacted today over concerns in the bio market not blending as much. The feature became buy meal sell oil. This worked big today. The meal market has been the weak leg of the complex which put the pricing at a competitive level. This has helped lift the market of late.
BEAN OIL – The bean oil market came under heavy selling pressure with the administration proposing a scale back on blending rates. This on top of expanding bean oil stocks domestically. At present the US price for bean oil is competitive on the world market. In addition the Palm has yet to build stocks in a significant way. The veg oil market has a potential high in at present. However the bearish overall aspect of the oils in general has yet to materialize.
SPREADS
The following is a list of spreads that I am watching
BEANS – JULY22/NOV22 – this has been as high as 54 low as 20. Midrange the USDA report may have an influence tomorrow.
BEAN OIL – The July22/Dec22 recently traded 220 over. This is a spread I suggested was a sell earlier with a quantifiable risk. This has broken sharply over the last few sessions. The bean oil stocks are growing. If the blend rate is cut selling rallies here looking for a carry market eventually.
CORN – The corn spreads march22/dec22 gained a bit today, currently at 32.5 over. The March and May both have upside opportunity if the South American weather remains friendly. Also if the US farmer remains reserved sellers.
Quantify your risk.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
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