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The beans traded both sides. Tomorrow is the USDA report. All the ex bulls now think the market can’t rebound due to the lack of dialogue with China. Perhaps they are correct. The market has broken a lot. I have expected that. I believe it may be the wrong time of year to press the short side. Don’t misunderstand – I am a bean bear macro. I do think that anything could happen, weather, an open dialogue with China, that drives markets higher for a short period. In my opinion the next shoe to fall in the soy will be the meal. The funds are currently long a healthy amount. In addition, the crush margins will fuel a rapid crush pace. This will ultimately weigh on the market. I continue to watch the bean vs meal relationship. As well as the new crop crush margins. “when the bow breaks the cradle will fall”. Time to let the acreage play out. I am looking for an increase in acreage. Remains to be seen
The Corn was under pressure today. The crop conditions, as well as the on going rains have the market under constant pressure. It is my belief that the corn price is well under what the current carryovers would suggest. Some long term thoughts. I firmly believe the US will work out a deal with NAFTA. This I believe could be 1-3 weeks away. This will be a back stop to the corn market. In addition, the current weather issues globally have the US in a prominent spot to pick up exports. This is a situation that I believe can last for approx 12 months. It is also my belief, tomorrow the acreage could come in less than the market has dialed in. The expectations are for an increase. It is my belief corn will witness a decline as well as a draw down in stocks. If realized, corn is to cheap. As I always say, remains to be seen. The weather for the next 45-60 days becomes important.
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