The soy markets have corrected a bit here with meal leading the way. The USDA report Wednesday should provide a couple things. 1) confirmation of a larger carry. 2) confirmation of a weakening demand base. The current estimates have cut China's demand back. It is important in my opinion to understand that the numbers in and of themselves by all comparison are bearish. Chinese demand will not change this fact. I also find it interesting that the Hog market is dialing some risk premium into prices due to the Chinese issues with hog flu. Yet the meal market remains firm again with the funds holding longs. Today the UN stated they think it will be difficult if not impossible to eradicate the virus. Rather, it is likely it spreads and could jump to other countries. This is a long term potential problem. The availability of meal globally will grow. This seems somewhat fabricated to ensure large crush margins. Given the US discount to SA in beans, Argentina can buy all the beans they want to crush for meal. In addition the Brazilian has ample supplies. I really don't see the bull side of 320 meal. I as always could be wrong. So, if short buy calls or trade with a stop. It is my belief we will enter a bear market in meal.
The corn slowly forming a bottom. The report Wednesday could help the bull side if, and I say if, the USDA confirms a yield equal or lessor than last month. This would in my opinion open the window for a move above 4.00. The market would be forced to watch closely the SA production. Any disruptions then become a real issue to the global balance sheet. Lets see what transpires next week. Look for corn to hold last weeks lows.
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