Market Update 11/25/2019

November 25, 2019

US$ 98.17 up .31 for the week

Call day or night 320.760.0332

CORN

Corn futures gained 7 cents for the week and held the 366 support level.  However some analysts are still saying that strength looks to be a selling opportunity as a trend follower.  Other analysts area saying that there is a 30 cent rally coming in corn but don’t know if it is going to be the 1st of December or the first of January.  Then if the market breaks back down to 366 the next support is 358.  I know it is a lot easier to say than to do but things like selling the carry out in July and owning call options is one way to proceed.  And of course taking advantage of the strong cash basis needs to be considered. I would add here that there is an argument that USDA understated the 2018 crop so look for supply changes at some point.  For some reason the least favorite way of producers to proceed is owning put options on corn that has been put in the bins at home. That doesn’t mean it should not be considered. Keep in mind that because the corn market has been in a range of trade grinding back and forth that both put options and call options are considered deflated.  Pick your poison. 

SOYBEANS

     Soybean futures lost 21cents last week continuing the downtrend.  Harvest is for all but a few is wrapped up and in the bin and soybean crush is stellar and cash basis is like we have not seen for a long time yet as far as soybean prices it is as if no one cares.  So where is the post harvest rally and what does all of this mean?  Well the trade view supplies as more than adequate with no and I mean “no” near term trade agreement with China and even if it were done how many soybeans does China really need from the US?   Oh and of course guess what?  The US will produce more soybeans next year and South America already is producing more. Realize this, as these support levels are broke we are now looking at 13 and 20 cent lower. John has come up with some extremely innovative option strategies that are workable for soybeans in storage or 2020 production.  Give any one of us a call.

CATTLE

          December cattle lost 1.12 last week due mostly to traders fearing the cattle on feed report after the market closed Friday.  So that report was not that bearish and in some instances considered friendly due to the placement number being 2% less than the estimate.  Let’s just say we have dodged the bullet so far.  Yes, cash trade was mostly at least steady to a dollar higher so no complaints there.  Now we are faced with a holiday shortened kill week but that is prefaced with the fact that most anticipate the next holiday to pick up demand.  Today traders are back in the buying mode with most of Friday’s losses regained.  I am not going to complain and the fact is that the market is reacting nicely.  Resistance on the February futures is 125.80 just 40 points above today’s high.  Certainly the 130.00 level should get producers attention as sellers.

MILK

         December milk futures gained 21 cents last week landing at 1875.  Trading places this week with cheese and butter higher and products lower.  We have corrected production just not enough.

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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