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The bean market rallied today,the reason sited is the 12 bln aide package rolled out to farmers. This band aide will assist this crop season. I am obviously pro agriculture. I would say that it is my observation that govt programs are rarely a friendly scenario. Depending on the details which I have yet to see this could ultimately pay for more production in beans. The conditions yesterday could potentially put 2 bu to the acre more on the yield. This could potentially push domestic carry above 700 million bu. This with the global numbers at or near 100 million tons really has the global supply in a burdened position. The knee jerk reaction could be friendly rally now. However the long term prognosis in my opinion is bearish soy. This is not due to tariffs. As it is the tariffs have actually increased near term global demand due to the price differential between the US and Brazil.Given the margins it is my thought that the crush will continue at or near record levels. This ultimately equates to more protein. I just dont see a long term bull in the meal market. The oil has languished under the weight of palm. It has been my contention this would bottom. That remains to be seen.
The corn takes yet another hit. The reaction to the soy package was buy beans sell corn. This to me makes little sense. First, yesterdays condition rating indicate the USDA could add 3-4 bu to the yield. This could potentially add 300 million to the supply. It is important to look at the whole balance sheet. It is my contention the exports are understated 200-400 million. This would essentially be a wash. A corn carry of 1.5-1.7 bil does not equate to a $3.50 board price. $3.00 cash corn. This to me is to low. The global scenario is implying a real need for US exports. I have bored people with the same thoughts. The EU will need feedgrain. The Black sea will be short. There is a turn here between oilseeds and corn. The US has a 6-12 month window to sell, sell, sell, corn. The exports should continue in a positive light. It appears the perception has not become the reality at present however. Lets see what will happen.
For a long term outlook firstname.lastname@example.org 800 993 5449 I attempt to identify long term opportunities in the market. A long term plan can be a valuable tool. It is essential however to quantify your risk.
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