Market Update 1/4/2020

CORN

Corn futures gained 33 cents last week due to no moisture of substance anywhere.  That can change.  Technically the market blew through 454 and hit near 500 overnight.  That was a long time ago and the market has pulled back 18 cents, that is what you call volatile with no doubt more to come.  The numbers to watch now are 459 for support and 522 as resistance.  Considering the funds own 347000 contracts there is plenty of room to the downside.  My thinking is in line with many in that the way to handle this runaway market is to make sales on the way up with call options in place for protection on the upside.  Sounds easy enough but call for clarity.

SOYBEANS

March soybean futures gained 47 cents for the week and added over 30 Sunday night.  Guess what?  That must have been too high as the market has pulled back most of that 30 cents.  So, the March contract zoomed up to 1350 right at resistance for the trend higher and pretty much fell out of bed.  Now the numbers to watch technically are 1275 for support and 1407 for resistance, a nice little range.  The opportunity was at 1150 for the November new crop contract.  Keep picking away.  Fundamental considerations at this point are weather here and especially in South America. Secondly export sales reports as the soybean inspection report did not make expectations this morning.  Last and certainly not least the talk of 90-91 million acres of soybeans being planted here will get the markets attention sooner rather than later. 

CATTLE

The February live cattle contract gained 5 cents last week and yes, I am haunted by what is going on this morning.  The trade opened steady but did not take long to reverse lower and looks plain ugly at this point.  The February contract is down 250 and fell through vital support at 11342.  Therefore, should the contract not be able to regain that number in a couple of days it will be considered a temporary high and 11242 will be the last-ditch support number.  There are still a couple of positive factors in that boxed beef movement is still extremely good in a more than volatile market.  The cash was ok but not on fire. A few head sold at 111 before supplies dried up and the market moved to 112.  Strange how that number is right near the February futures, with dressed trade up to 176. Who will win the tug of war?  My guess is that the cash will pull the futures higher. The problem with the futures movement 115 cash is pretty much out of the picture.  Haunted again.

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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