Monday July 6, 2020
US$ is down .115 at 97.26 good follow through lower this morning
Corn futures gained 25 cents for the week and near forty cents from recent lows to recent highs. There is nothing wrong with doing something defensive in this range as I see it. The moving factors was the drop of the “final” planted acreage report at 92 million which I believe is one of the largest drops ever. At the same time weather is rearing its ugly head calling for hot dry weather for the immediate future across huge areas of the growing region. Some reasons for concern are the double top on the December futures at 363 which needs to be violated soon and the fact that USDA says there is plenty of corn supplies available. Therefore, using this rally and especially up near 388 needs to be selling opportunities, so do something.
Soybeans gained 32 cents for the week and again it is weather and the USDA not being overly bearish with their numbers of supply and acres. Now it is critical to see follow through buying to keep the bullish attitude. Keep in mind that with rallies like we have seen and continuing this morning and that weather markets generally do not last long enough. So, you can take advantage of shorter term put options with either the August monthly options or even the weekly options at some point. There has also been considerable interest in short dated options base off the November futures. Some key numbers of resistance to watch for are right here at 913 November and then 920. Hopefully we can blow through 920 and head toward 980. I should point out export sales continue to be reported and are also extremely supportive.
August live cattle gained 402 last week with cash sales reported 1-2 lower, not the worst for where we have been. August futures closed over 100 dollars, which is somewhat of a surprise to me. The answer is that there has been fund buying due mainly to the fact that the futures have been beaten up for so long and evidently have reached levels where value has been reached. We have finally seen some sort of stability in the cutout values which is plus. We have to remember that there is still a lot of big cattle out there to be slaughtered and yes, we have been slowly gaining on those numbers but the end is not here yet. Finally, the good news is that those put option spreads that we talked about last week can be purchased at more favorable levels. Call for updated availability at the number above.
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