Grain and Livestock Outlook

Hot and Dry Equals Higher by John Walsh

SOY The weather continues dry in the key growing areas of ARG. This allowed meal and beans to move to new highs yet again today. The feature continues to be the large move in the Bean and Meal spreads july/nov, and july/dec. A couple thoughts. The markets are approaching key levels. 11.00 in beans and $400.00 in meal. I would suspect a pause here at this lofty level to gauge the actual crop sizes. But that remains to be seen as the funds continue to roll. Many questions. How much meal will the US export, will Brazil cut us out of the bean market given their huge crop. If so then the crush is satisfied and the meal is made. Looking at the hedging side of things. New crop beans were lower at different times today. The 10.40 level basis nov 18 is lofty and certainly needs to be rewarded with cash sales. As I have said above 1020 is some sure thing money. Lock some in. If you want to roll the dice and play for 11 nov 18 beans, do it with a cost average approach and sell this strength. Gamble with a smaller percentage of the crop.

Corn The Corn is acting strong and should. The confirmation of weather issues in the south American growing regions is important. This sets the US crop up in a different light than earlier thought. The US will stand to gain more exports. The domestic crop this spring becomes very important. There will be less room for error. Now again I dont see a home run trade at present but certainly opportunity. Hedging at present values. I would like to say. The Corn at present is reaching my levels. The dec 18 at 403. My written targets were 398-406. We are there. I would suggest taking advantage of a portion ofthe 2018 hedges at this level. A portion. The dec 19 415-420. We are there. A rally today helps out and a small amount ofsales are recommended. There exists opportunity in my opinion in Corn. A reasonable pullback may set up a longer term move that is quantifiable into the summer. The weather will play a key part through the whole year, as we have witnessed here the past month.

Technicals-

I offer these levels as areas to enter a position, or consider as stops for a trend that has taken place. My thoughts are longer term trends, catching and staying with them. Both difficult and elusive. Quantify a specific risk relative to the account size and let it go.

BEANS- The bean market is in an up trend. To potentiallybreak the trend basis July 18a close through 10.43, then 10.35, would be needed. For anyone fortunate enough to be long these may be reasonable risk levels to consider.

MEAL- The meal has been the leader for various reasons, and is currently in an uptrend. To potentially break the trend basis July 18 a close through 372.70, then 365.90 would be needed.

OIL- The bean oil has closed through the buy levels at 32.65, then 32.56, This indicates trouble. A close above these is needed to reconfirm a move up. At the very least exercise caution with a stop under longs.

CORN- The Corn has been in a nice uptrend for a bit now, To potentially reverse the trend basis july 18 would take a close below 382.75 then 381. I have reached my near term targets however and think the market may run out of steam for a bit. For Aggressive traders just place a stop at a reasonable level. It is worth noting that a 20-25 cent rally in corn is sometimes worth booking of late.

Be Well,

John Walsh
800-993-5449
jwalsh@walshtrading.com

www.walshtrading.com