MARKET UPDATE 1/13/2020

January 13, 2020

US$ 97.06 up .51 for the week Just won’t go down

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CORN

March corn futures were unchanged for the week, although it did take a turn higher after the USDA report to get the market back there.  There were several small changes made by USDA but in the end traders digested the changes and became buyers.  Even though funds bought 12,000 contracts Friday they are still holding a short position with 86,000 contracts sold.  So certainly there is room for more short covering and it appears that today is such the case.  The March futures have traded above all recent highs and is trying to make believers out of the bears.  Time will tell and as of now taking advantage of strong cash basis is of the utmost importance. 

SOYBEANS

 Soybean futures gained 5 cents for the week no thanks to the USDA numbers.  There was really nothing positive for numbers but some how fund traders decided to buy and brought the March contract 10 cents off the lows of the day.  That was nice however the damage was done by trading below the 945 number and not being able to go above there so far today.  It is getting to the point where I just want to say “go fishing” and come back the middle of March.  I guess we better see what materializes on Wednesday at the infamous signing of a trade deal with China. All I can say is that it better be positive.  The 900 level available for new crop pricing is still hanging around.  Where is there more risk, 10,000 bushels of soybeans in your bin at home or putting that cash in in your pocket and spending 20 some cents for a call option position?  The latter.  Fund traders are now on the plus side of the market with just 2000 long positions.  That is not a position they will defend if Wednesday’s signing turns out to be a farce.

CATTLE

February live cattle futures gained 270 last week but at this point it appears to be somewhat overdone.  Today the market has failed to get near any resistance like 12790 or 12810 so it will continue to struggle.  Cash was barely higher last week with the best numbers turned in in Iowa at 126 and 200 dressed.  Just not enough to keep the futures market ticking higher.  Now I did not say that this run higher is over just slowing down.  Along that line of thought is that carcass weights have crept higher at the same time cutout values have declined.  Both of these trends play into the packers hand and must be dealt with in the market place.  In other words with either higher futures values or higher cutout values to keep the greedy packers happy.  Keeping in mind that our beef will continue to have plenty of competition from poultry and pork an another unproven protein that I can’t get myself to put in print here.  Longer term it is sad to say that Australia’s forced liquidation of beef herds will probably help demand here. 

MILK

 February milk futures lost again for the week ending at 1698.  So we have seen it again that bouncing higher is near impossible to hold on to.  The only way to defense that is when the futures market does touch between 18 and 19 get those put options bought.  Then hope the market rockets over twenty and never comes back.  Needless to say there was nothing positive about the butter or cheese trade, both being lower.  So either milk production needs to come down or milk demand needs to improve.  I for one will take improved demand.

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, or 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

There is substantial risk of loss in trading futures and options.  Be sure that you understand the risks before making futures, options or cash transactions.  This is not a solicitation to buy or sell futures or options and is based on information that is believed to be accurate.  Past performance is not indicative of future results.

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