Market Update 8/17/2020

Monday August 17, 2020

US$ down .32 at 93.09 and this morning dropped below 93.00



Corn futures gained 17 cents last week. Whataaaaaaaaat a turn around.  You have all heard the news of the inland hurricane going through the corn belt shortly after I wrote here a week ago.  The gains continue this morning so as one guy says it must be the real thing.  Chart formations agree.  Keep in mind markets do not go the same direction everyday but this trend has definitely changed to higher for now.  The keys going forward will be to see China in buying US corn as they continue to have production trouble due to flooding and drought at the same time.  Secondly it will be important for this afternoon’s crop condition report to confirm that the crop has been damaged significantly. Thirdly it will not hurt to see the continued decline in the value of the US$.  Remember the supply number is still called burdensome, therefore the next 20 cents getting the market back to the recent 363 high will not be a slam dunk.  Perhaps purchasing the December corn 340-350 put options for around 10 cents would not be the worst idea.  So, we did not even mention the USDA numbers last week.  Suffice it to say it was not the report that got this market started higher. 


Soybean futures gained 31 cents last week for many of factors stated above. The better part is that soybeans have actually had better export sales reported and that is a good thing.  Last week’s report was fairly neutral but the estimate yield was up to 53.3 bushels which would have been difficult to digest had it not been for the wind event across the corn belt.  Now the crop condition report needs to verify the trade believing that there will be a reduction in yield and acres leading to less production.  USDA did also reduce supply fractionally last week which is a step in the right direction.  Of course, with a 17 plus cent move higher today resistance levels have fallen by the wayside.  So, 904 and 907 are gone and now looks like 921 is in the sights.  Nothing is for sure and we have always thought that over 900 was good.  The market has changed so now it is patients in the forefront.  I did make the comment to someone this morning that there were now exports reported this morning and we sure do need more.  Call anytime.    


Cash cattle trade took another step higher last week with a range of sales in different regions.  In summary the low was 104 in Texas up to 107 high in Iowa.  August futures failed at 10822 and dropped a dollar, not a pretty scenario and this action could very well indicate a near term high.  The trade was set up with what old timers call the cash cow trade or syndrome.  Nothing is 100% but if you would like more information let me know. Now the October live cattle futures has dropped to support at 10870 from the high of 11115, not good.  There has actually been some supportive news from the cutout values and the perceived demand and a slight cleanup of the overweight cattle standing in feedlots. 

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