Market Update 6/01/2020

Monday June 1, 2020

US$ lost 1.39 ending at 98.41 That’s a big drop

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CORN

The July corn futures gained 8 cents last week but look where we are now.  The trade is 6 cents lower this morning with overnight news everywhere about China halting purchases of US ag products.  This brings a real threat to the cancelation of the Phase 1 trade agreement, what are we thinking?  I am just an observer, but it appears the US will wear out the printing presses making money that will not be worth much.  The market did a nice job last week and technically looked like it was healing.  Today not so much.  The problem is that if you put orders in to sell higher and get hit it probably means something changed and we are headed higher yet.  That is where call options come into play.

SOYBEANS

Soybeans gained 8 cents also last week but also took a gut punch overnight with the announcement from China that they are ordering cancelation of US ag products of which soybeans are probably on the top of the list.  So, we find the trade 6 lower in the overnight.  I might suggest finding a short term put option to get my foot in the door before the elevator continues down. Oh, and did I mention it is difficult to find a negative weather forecast which is what the high powered analyst say is the only thing that can move the market higher.  I do not disagree.

CATTLE

August live cattle gained 227 last week ending at 9972 with the cash remaining in the 110-120 range.  That is a huge cash range and it is not clear who is getting the 120.  This week the market will get no help from the pork or poultry complex both of which stand to see pressure from the China trade announcements.  The problem has been pointed out about the huge inventory of cattle in feedlots looking for a place to be processed.  Some believe the slaughter is gaining on the problem but I see it as an extremely volatile situation because one blip in the numbers being harvested would be devasting.  I wish I knew more about the program to reimburse loses but I do not.  Good luck.

Milk     

Milk futures gained 130 last week with June going to 1815.  Now that could have very well been an attractive selling opportunity.  Time will tell but I will say it again that with gains like that a 30-50 cent put option is a gift.

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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