Short ZC/KW @ -67.75. - At this ratio, wheat can start replacing corn in animal feed. - Corn numbers just came in much higher than expected...
Short canola X/F @ -6.8. - China stops importing canadian canola. - Seasonals. -N/X very low compared to X/F.
I don't think so. The soybean ending stocks will be near 1000 millions tonnes. Previously the record was around 600. The feeding demand for soybean meal is down 40% in China due to ASF. Even with a resolution of the conflict, I don't see it going that high again, but I don't trade outrights.
By the way, I just shorted ZS X/H @-15.75. - Huge carryout, lower chinese soymeal consumption. - Price risk on the outrights is on the downside as everybody assume the trade war will soon end. - CME increases storage charges from 0.165 c/b/d to 0.265 c/b/d from Nov expiry on.
for wheat, canola ,what happening in China is also worth watching, drought for now https://seekingalpha.com/article/4253492-el-nino-back-watch-impact-agriculture-sector-china
Out@ -9.450. Not good. Spreads really trade independently from outrights on livestock. If someone has an explanation for the drop in J/K and then K/M, I am all hears...
I think it is because the deal with China gets postponed all the time. 2 months ago there were high hopes that China would by massive amounts of soybeans, corn, sorghum, ethanol, pork etc you name it. They bought a bit of beans that they needed anyway and some pork but nearly not as much as the market had hoped. So the longs that got into J and K are now moving to more deffered contracts hoping the same....
I agree for beans but not necessarily for pork. I heard yesterday the 77700 MT sales to China is the biggest ever. The demand is really there now. The consequences of ASF and drop in chinese pork production aren't fully understood at this point. IMO the justification of dropping spreads in hogs have more to do with funds flow( which is pretty much what you said ), but also index convergence and may expiry illiquidity.