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The USDA report today offers a realistic look as to where we are in my opinion. The numbers across the board for beans are bearish. And long term bearish. The market is due a rally, however, this should be met with a thought of an opportunity to hedge production. The domestic carry was raised to 580 for 2018/2019. This is due to a reduction in exports. Demand missed is gone forever. Back to the old way of looking at things. It goes to the bottom line. The global numbers are bearish and approaching 100 mmt. The significant part of this should be the realization that the US will be in a dog fight for global exports. This was coming. The markets are in a different phase and it is overproduction. The long term prognosis in my opinion is cheaper prices, more competition. There will be rallies and opportunities, but the bull story will be year to year. We have been in a decade long demand expansion and price reflected that.
The Corn numbers were very positive. The domestic carryover number declining as opposed to the average guess. The export figures may still be too small. The global carry is one of the tightest in 30 years. It is my thought that corn is undervalued and we still can experience a reasonable rally. The weather has been very good and will continue to be for the most part. The bear camp will argue the carry may go up due to yield. This will only be true if the crop is delivered with a strong finish. The end result is that corn this year presents a value at these prices. The end user/feeder should look at these prices as an opportunity to lock up needs.
" SOME ARE BORN GREAT, SOME ACHIEVE GREATNESS, AND SOME HAVE GREATNESS THRUST UPON THEM " WILLIAM SHAKESPEARE
John J. Walsh
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