Market Update 8/24/2020

Monday August 24, 2020

US$ up .16 at 93.25



Corn futures gained 3 cents last week so at least it was not a loss.  Yes, the crop tour confirmed significant reduction in yield potential in Iowa for sure.  The other I states maybe not so much.  In my opinion the market movers are the weather and yield potential.  I know that is not genius but just so we know where the focus is at this time.  Therefore, we know the extended forecast turns cool and damp after the 1st of September, about a week away.  We also need to continue reports of corn export sales, there were none this morning and I believe we need to see at least 3 or more per week.  Now back to yield potential and the crop conditions report today.  I have talked to at least three clients this morning that said conditions were no doubt going to decline, which would be positive to price.  However, should that number remain unchanged the market is done going up in my opinion. 


 Soybean futures gained 4 cents last week and the November futures contract did not fall below 900 which I feel like is a pretty big support number. Overnight and early this morning started out well but has lost a lot of enthusiasm at this point.  I have been telling callers that closing under that 900 mark will not bode well technically and that 870 would be a downside target.  The old adage is that the soybean crop is made in August which end next Monday.  Will the month end by adding bushels or losing bushels?  I just think that it is perceived that bushels are being lost in a lot of areas.  Now I am not saying that is gigantic but that is the only way to get this supply issue under control.  Also as stated above we desperately need to see continued export sales reported otherwise 900 or 910 October put options make a lot of sense.


 Cash cattle trade gained 1-2 dollars last week with the high of 109 in Iowa and the low of 106 in the south.  That was before the dreaded cattle on feed report which came out Friday and was certainly considered negative.  I believe many will say the market is negative but could be worse.  Here is the thing cutout values gained 15 dollars last week.  No reason for the packer to slow down.  He is in the money minting business.  Even though the needs have probably been fulfilled for the Labor Day weekend and schools are probably not going to be big consumers.  On the positive side it was pointed out that the placement weights reported Friday showed lighter weights therefore will be pushed out into the new year.  To me some of the lessons to be learned with this market as with most is that they do not go up forever nor down forever.  So when the market is overbought technically and I don’t care at what level it is, take protection.

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