SOY COMPLEX
The markets are keenly focused on weather at this point. We have dialed in the recent Argentinian drawdown. However, according to most analysts, further dryness is not dialed in. This may be the case. Going home this weekend it appears that Argentina will remain mostly dry. The real question now is will the US and Brazil make up the global soymeal supply with this many tons not available. Looking at the Board today, the new crop beans, nov 18, were not able to mount any rally. This in my opinion has to do with the long term outlook for exports. Negative numbers posted today, and with the Brazilian crop in an advance size wise 114-116 mmt, it appears the US will witness stiff competition. It is also telling that despite the run up the basis has remained wide. This trend does not look to change without a serious problem here. I do believe the job of the market is to help define and hedge risk. I just can’t help but wonder what have we really priced in. The US carry has doubled in two years, with record demand. The global carry is up 50% in 2-3 years. All this while oilseed carry is at or near a record. How much is enough?
CORN
The Corn has remained steady strong. The lack of any real fireworks in this arena is a bit surprising. The global carry is in decline. The US carry in moderate decline. The exports on the rise a bit. The Brazilian second crop in jeopardy, while Argentina crop declines are substantial. The corn presents a longer term opportunity than the beans, in my opinion. I also think we are switching the global focus to more bean acres less corn. This may be true for more than one reason. The biggest reasons may simply be the cost of production. And with this years rally and price relationship, it makes sense under certain circumstance. The corn can be handled in a few ways. Futures, covered positions, covered option positions. Give a call for specifics. The goal is long term macro outlook. Quantify a defined risk reward and go after the plan.
For a detailed outlook or for a conversation – 800 993 5449 or jwalsh@walshtrading.com