Market Update 9/21/2020

Monday September 21, 2020

US$ was down .40 at 92.92



Corn futures gained 10 cents again last week. The gain was, in my opinion, due to continued export sales reports, however not as big as we need.  After that the gain was probably more in sympathy with the soybeans and wheat.  Today the markets have run into a buzz saw early.  Certainly, one can attribute the down market to an overbought technical picture that was looking for a reason to correct and found that reason in a stock market reeling from the death of a long tenured supreme court justice.  Keep in mind the big picture does not change that easily.  Harvest will continue to ramp up perhaps shedding light on yields, however who do you believe.  The next couple of days will be interesting to see if support at here at 371 December futures can survive.  Stay tuned.


November soybean futures gained 48 cents last week, that is pretty impressive and now we are faced with losing half of that this morning.  Interesting, one must ask what has changed?  My opinion is that the market was overbought and technically needed a correction and had reached nice resistance as pointed out last Thursday.  Now the market is no longer overbought and there were huge export sales reported this morning.  What I am saying is that not a lot has changed in the big picture.  Going forward yields will be bouncing around and acres will become clearer.  I still like the idea of protecting prices with put options at high levels, leaving the cash upside open.  Even today you can buy a November 1000 put for around 13 cents and that gives you protection through the October 9th report which better lower supplies again or the market will continue lower.


 October live cattle futures gained 182 for the week ending at 107 plus.  That appears slightly impressive on its own and then the cash trade was reported mostly 103-104 with a high of 106 in Iowa.  Where do we go from here?  As usual the answer is “it depends.”  We have to realize that the US is in turmoil and that cannot be a good thing for equity markets which will be viewed by the commodity markets as a big question mark.  It was pointed out to me this morning by an astute investor that food is of the utmost importance and from the buying we have seen of proteins going to Asia, they are concerned.  I do believe that the red meat has not lost its place in the domestic diet.  Although we can not sit back and let the demand come to us.  The industry needs to be supported and my opinion is that it is education.  We need to give the millennials what they want. 

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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