AG TIME Two Divergent Paths by John Walsh

Published on: 01:33AM Nov 13, 2018

The Soy was down a bit today. This rally of late seems to be based on optimism that the US China relations will cool and demand will be restored. Perhaps. It is my belief the relationship will be restored to the Liking of Trump. However, I also believe we are witnessing some demand changes in China. The stagnation that is taking place could be, in my opinion, longer term. If so, the global growth in production is difficult to take. Too much of everything. In addition, the Brazilian planting is estimated at 71% up from 54% normal. This equates to early exports. The US export pace is dismal. At Best. The Chinese will need some US beans. The question is when. The market will wind up where it is supposed to be, it is just a matter of when. One last thought regarding the soy. The Chinese African Flu is expanding territory  in China. The latest concern, one major feed producer has found the virus in feed. This could prove to be very bad for the market.

The Corn is grinding higher today. The fundamentals domestically could support a move higher. The USDA report with the decline in production signals a likely further draw down next month. The domestic balance sheet is friendly. The global numbers are confusing in a sense. The Chinese carry is the lions share of the global numbers. This looks like a lot of corn. However, the reality is that this will never be exported. Rather, it is a Chinese cushion. It exists, but potentially is a non event. With or without Chinese stocks the world numbers are actually separate in that sense. If there are any global weather issues (nothing at present) the global balance sheet for corn could seem tight. The US now will be in a nice position to potentially pick up demand for corn. It is my thought that the Dec 18 could trade to 380 in the near term. This would probably bring out cash sales of some of the old crop corn. I hold out a thought that the corn Dec-March can trade to 410. Quantify your risk.

THANK YOU FOR THE COMMENTS. To discuss any long term outlooks feel free to contact me at 800 993 5449, or [email protected].  I will always reply back.




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