Monday August 31, 2020
US$ down .86 at 92.39 Interesting
Corn futures gained 19 cents last week, finally. Overnight the market traded above the last December high which is positive for sure. Focus will again be on the 3 pm crop condition ratings. Needless to say the drop last week was a market mover. Mostly what I hear now is that the moisture and cool weather is too little too late. Keep in mind the market moves from so many many factors. It appears that at this point in time a lot of those factors are positive, again, finally. There was another big export sale reported this morning to China which we continue to need. Also significant is the funds have bought something in the area of 60,000 contracts of corn in the past 7 days. That brings their position to something around 80,000 short positions and falling another positive factor. If you were astute enough to sell or price protect corn at 360 plus on the December futures consider buying the December 390 calls around 6 cents.
Soybean futures gained 50 cents last week and shot up around 17 cents overnight but have now settled back to about 9 higher. I consider this nice price action and pull backs are needed to soften any overbought stature of the market. So, to answer my question from last week about adding bushels or reducing bushels our answer was the crop condition ratings falling last Monday more than estimated. I described the report as a solid triple but not a home run. Should the ratings decline today similar to last week we may be going for a grand slam. There was not an export sale reported this morning and that will continue to make the market uneasy. Same old story, be in a position so that you don’t care if the market goes up or down. Easy to say more difficult to do. Sell cash and buy a call option or buy a put option and hold cash.
Cash cattle trade is reported to have lost 2-5 dollars and all regions are now converging on the August contract which expires today at noon. Cutout values enjoyed another week higher. Who is that good for? October live cattle futures lost 365 for the week and are trying to hang on to small gains this morning. The bad news is that there is no good news. The October live contract is trading a dollar above the August contract at the moment. Therefore, it appears that contract needs only to tread water for now. At the same time a case can be made that the futures have corrected low enough for now and are technically oversold. So I guess it is difficult to be a seller here. Perhaps some nice weather for the long weekend coming up will pull some supplies off the selves. Call anytime.
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