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AG TIME - Macro changes by John Walsh

Published on: 23:41PM Jul 09, 2018

The soy under pressure led by meal. This may be the beginning of something. The meal has been the strongest part of the soy. This has driven oil share down to 30% and the crush margins near record price. The global landscape will shift from a tight meal market ( although I question this was ever the case), to a very amply supplied meal market. The amount of beans available will rise steadily culminating with the southern hemisphere crop. This could push global bean stocks above 100 mmt. It is important to put this in perspective. In addition, the market is focused on the trade battle between China and the US. Perhaps some attention should be on the potential credit problems in China. There exists a real concern in the credit and credit related to real estate. Some analysts expect a larger problem than the US experienced. Remains to be seen. But, I have been talking about this for some time. Under this everything slows. In addition it appears the China plan going forward is to contract the animal sector and look for alternative protein sources. Not bullish meal. This at a time with the incentive to crush everything under the sun. And a large fund long position. Let;s see what tomorrow brings after the crop ratings. Expect an increase of stocks on the 12th, in my opinion.

The corn held in well even with beans down 20 plus. It is my belief the Corn is putting in a bottom. The condition ratings should show a decline this PM. Now the question is the weather. It has been very good so far, no question. The US demand scenario remains intact and the issues around the globe in feed grains, in general, should offer support. I still believe the corn has a demand driven market. I still believe the US and Mexico will come to an agreement regarding NAFTA and that the relationship has good days ahead with cooperation. The change in the regime in Mexico may well prove to be a positive for relations. In my opinion, the corn is undervalued relative to an historic look on stocks and demand. Lets see what the conditions say.

" IF MONEY IS YOUR HOPE FOR INDEPENDENCE YOU WILL NEVER HAVE IT. THE ONLY REAL SECURITY THAT A MAN CAN HAVE IN THIS WORLD IS A RESERVE OF KNOWLEDGE, EXPERIENCE, AND ABILITY " HENRY FORD

BE WELL

John J. Walsh
800-993-5449
jwalsh@walshtrading.com

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