GENERAL:
The Global atmosphere has a negative tone. The war in Ukraine is a real concern for various aspects of the market. The energy sector continues to receive a bid. This volatility will continue. It appears to me there is a lack of understanding regarding the potential slow down that appears to be coming. The EU appears to be slowing. China has a real concern with the real estate market there. The US slowed in the first quarter 1.4% decline. Yet the media does not report this. Rather, people are talking about growth all while the stock market corrects. It is my contention this is all being under estimated. The US is in a difficult situation on numerous levels. The employment is a struggle. The amount of jobs unfilled at a record. The rate increases are just starting. This will be difficult to contain in my opinion. This will correspond with difficulty for many companies as the cost of capital climbs. It is my opinion the stock market is just starting its decline. The commodities have been in a bull market for a bit now. I think it prudent to not underestimate the relative high prices, especially if demand declines. It is difficult to spend more and more when the costs out weigh the increase in wages. This is the macro scenario at present. I offer these thoughts as a general view. Lets see what happens.
SOYBEANS
The bean market has broken approx $1.00 per bushel. The fundamentals need to really be looked at. It is my contention the long term fundamentals have shifted. The demand is slowing globally. The domestic carry will grow significantly this year. The weather looks as though the acres will grow. This is especially true in my opinion in the northern growing regions. It looks like a 1-1.5 million acre increase could happen. If this is the case then a 450 – 500 million bu carry could happen. In addition the global carry will grow to 95-97 mil mt. These are real numbers and do not equate to the current price structure in my opinion. I suggest producers look at current prices and lock up old and new crop pricing on a prudent amount of production.
MEAL / OIL
The product value of the crush rose to approx 50%. This is historic. It has happened before, however, a long time ago. The shift may be close to changing. The veg oil tightness has been real. However, competitive oils are starting to build stocks. This trend could continue. This should alleviate pressure on prices and cause some easing in the near to medium term. The vegoil market has also been supported with high crude prices. This continues to remain elevated and needs to be considered. The bio blending rates also need to be watched in the near term.
BE WELL,
John J. Walsh
President, Walsh Trading, Inc.
800-993-5449
312-208-8836
jwalsh@walshtrading.com
www.walshtrading.com
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