Market Update 7/27/2020

Monday July 27, 2020

US$ was down 1.50 at 94.34 Never expected that

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CORN

Corn futures lost 7 cents last week so what has changed? Absolutely nothing.  The weather is non-threatening and it will not be long before estimates of increasing yields will begin to surface.  Comments are being made that the crop is made and as good as in the bin.  I guess I am not on that wagon but certainly the window on reducing production is about to slam shut.  This morning and overnight the corn futures continued to make lower lows and lower highs. That is a bad way to start the week.  Also, there were no export sales reports out this morning.  Many advisors are saying don’t sell down here.  I am saying why not sell down here?  There are less risky ways to maintain ownership.  These levels are at the bottom of longer-term support levels and if they do not hold more selling will ensue.  

SOYBEANS

Soybeans gained 7 cents last week and no there is no need for a parade.  The bad news first.  Overnight and this morning the November futures contract could not trade above Friday’s high and as we speak and looks to be vulnerable to the downside. The good news is that more export sales were reported this morning.  The problem with the export sales reports in my opinion is that they are probably too little too late.  So unless the reports start to come in 3-4 times higher they are old news and do little to support the market.  This is pretty much a repeat idea from last week in that the short dated 900 September put option is just over 12 cents plus fees and commissions.  They expire in around 25 days and by then the window will be hardly open at all.

CATTLE

October live cattle futures lost 195 last week with 4 out of 5 days being a loser.  This will not stimulate any substantial gain in the cash cattle trade which was reported as less than a dollar higher last week.  For the week it appeared that once again cutout values found support and have stopped the crash of a month ago which is probably what saved the cash trade last week.  Back to the futures trade.  This morning started out gang busters and the market was like 150 higher.  At this point the futures are about a dollar off the highs.  Yuk!  Therefore, we turn our attention back to the October and December put options.  Everyone has his own idea on price protection and we can talk about a lot of alternatives, just do something.  

Any statements of fact herein contained are derived from sources believed to be reliable, but do not purport to be complete.  No responsibility is assumed with respect to any such statement, nor with respect to any expression of opinion herein contained.  Futures trading is speculative and a substantial risk of loss exists.  The prices above may reflect those of the relevant spot contract.  Movement in the spot contract does not necessarily correlate to the movement of individual option premiums.  Past performances not necessarily indicative of future results

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