Market Update 12/7/2020

Monday December 7, 2020
US$ 90.72 down 1.08 for the week. That is positive
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CORN

Corn futures lost 13 cents last week, OUCH! Overnight and this morning is no better. March futures are down 4 cents with 415 as a low. This is not pretty, and most analysts are pointing at fund profit taking from their huge long position. I can not disagree. The USDA supply/demand report Thursday is estimated to see no significant change in stocks numbers domestically and a small decline in the world supply. Boring.
But we know anything can happen and right now most of that looks negative. It does appear that export sales have slowed giving the above-mentioned funds incentive to liquidate. There is also speculation as to how the new administration is going to approach the China trade. My thought is that soybeans may lead us out of this lower trend.

SOYBEANS

January soybean futures lost 29 cents for the week and are weak again this morning. There is nothing positive about this price action and without continued export sale reports the funds are liquidating a huge long position of futures contracts. My thought is that there may be help on the horizon. The estimates for Thursday’s supply/demand are certainly supportive if it comes to be. Here is the thing, the high estimate is the same as last month’s number at 190 million bushels. I have seen a low estimate of 150 million and that would be crazy low. Just remember that the funds need to see the number and then react which may not happen until after the report. Until then the technical picture is weak heading for 1140 and worst case 1080. Hang on.

CATTLE

The February live cattle contract lost 85 last week and the cash was a dollar lower also and more in some locations. This morning is more of the same, sell, sell, sell. So, the December futures contract is in delivery and trading at 108. There was cash trade reported at 110 last week so what is going on? Simply put it would appear that the futures is dialing in a lower cash trade again. With the February contract trading at 111 it is easy to see there is no need for strength there. I admit that the cutout market has been a disaster, but demand has been adequate. We really need to get some confidence in the COVID vaccine quickly which really could expose the supplies as being inadequate to full fill needs in the first quarter of 2021.

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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