AG TIME - MACRO CHANGES AHEAD? by John Walsh
May 07, 2018
The beans and meal were under sincere pressure all session. The Chinese US trade conflict is cited as the reason. Perhaps it is the catalyst. However, it is my contention that there are other considerations afoot. The domestic carry has been growing, and will continue. The global supply is 20-25 mmt larger than 2 years ago. This is not bullish. All the while the funds have built a record or near record long position. The USDA report Friday will put stocks into perspective. A larger old crop number may be bearish meal. The Brazilian crop is larger. The world is crushing at a healthy pace. How much do we need? The Chinese are slowing the hog production. We could be on a major shift from feedgrain acreage to oilseed acreage globally. This would present some dynamic opportunities. STAY TUNED
The corn was under pressure. The soy weakness spilled over. The Brazilian weather offers some slight chances for moisture as we move through the week. The fundamentals however remain in tact. The demand is picking up. The USDA should confirm a tighter outlook later in the week. All of this and other inputs should provide a chance for further gains. A run to 440 level presents a real opportunity for 2018, and 2019 alike. There are certainly no guarantees. However, until the fundamentals change, the market will look for higher prices to build a risk premium. Look for rallies as either hedging opportunities or areas to make cash sales.
For long term outlooks feel free to give a call. Thank you for all the comments. much appreciated. I attempt to identify long term moves in the market. The corn vs beans is an example of this type of trade. This has been moving in favor of corn and, as mentioned, may be just getting started. Always quantify your personal risk parameters. firstname.lastname@example.org or 800 993 5449
"OUR LIFE IS WHAT OUR THOUGHTS MAKE IT" MARCUS AURELIUS - Roman Emperor, Stoic
John J Walsh, President, Walsh Trading, Inc.