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The soy traded both sides today. The oil share gained back a modest amount. There is much fear regarding all the trade tensions. It is my belief that ultimately that is noise. The reality of the market is that beans are off to a good start. It is probable that there could be an increase in acres. The Argentinian situation is still out there and could shift some demand our way. That is a friendly aspect of the trade especially after the recent break. In addition, the meal has been impacted by the Argentinian shortage. Perhaps we see some cash related buying next week. Going home this weekend I want to cover both sides of the marketplace. The meeting with China this weekend into next week will have significant potential to impact prices. Positive news could give a relief rally. The negative is already part of the reality. As rhetoric has expanded. It has been and still is my contention rallies are an opportunity in the soy for the producer. The long term reality of the global soy is bearish. A couple observations that I suggested through the last few months. The bean spreads have now moved to carrying charges. This is a structural aspect that is indicative of a more bearish market.
The corn came under modest pressure with concerns over NAFTA. The administration is ramping up the game and starting to implement tariffs. I suspect in the hope of forcing some change. Mexico does buy a healthy amount of corn. As I have said, this year it may be difficult for them to secure corn necessary for the feed outside the US. Given the global production deficits. The long run may be different. It seems in Mexico’s interest to figure out a solution to the issues at hand. Aside from these details the Corn has a chance for further appreciation. We may be in a range to quantify the risk and look for a strategy to the upside. The global balance sheet is now the tightest in some years. The US needs to have a good crop.
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John J. Walsh
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