SOY: The soy complex had a fairly active day with reasonably large advances led by beans and meal. The market, as I mentioned yesterday, is pushed by recent Chinese purchases and the recent weather event. It is my belief that the recent weather while friendly corn, did not do much harm to the soy. The overall bean numbers in my opinion are longer term bearish. This rally can continue on a flat price basis for a minute. It does, however, represent a selling opportunity in my opinion at higher levels. The meal was due a rally relative to bean oil as the share had made advances of late. The current dec oil share of 34.3% may need a further correction before it is worth buying. The oil may cool down a bit here with the Ukraine vegoil coming back on line with harvest. There are still some structurally strong aspects to palm, it may just need a bit of a correction. The next couple of weeks are important for the weather. The market will watch this closely.
CORN: The corn continues its recent strength. The Chinese continue to buy corn in record amounts from the US. In addition, it appears concerns over flooding in China has the market concerned with corn production. The impact, if the flooding continues, are significant. In addition,there are private estimates coming out that the Chinese stocks are nowhere near the reported levels. These rumors and/or estimates have been discussed through the industry for a long time. The question is whether there will ever be a reckoning and a reality moment. The corn balance sheet domestically looks more than ample. It is my belief that the corn is the one market that could see changes that indicate corn could move higher. Always have a quantified risk reward.
John J. Walsh
President, Walsh Trading, Inc.
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