October 14, 2019
US$ 98.01 down .49 for the week
Maybe the top end of the trading range
Corn futures gained 13 cents last week due snow falling on the north central corn belt and supportive rhetoric from China trade negotiations. On top of that the Thursday supply/demand report was a toss up. You see the stocks number did dip below 2 billion but not enough. Then the market pretty much over reacted to the downside Thursday and then reconsidered on Friday with a gang buster higher trade. This resulted in a new high for the multi-week rally off the supposed seasonal low. Also keep in mind there are still substantial short (sold) positions on the books that may very well become nervous and get serious about buying. Most analysts agree that the market bulls are in control and that upside objectives are first in the 408-412 and then 421-425 on the December futures. Anything can happen as we saw last week so be prepared.
Soybean futures gained 20 cents for the week mostly on Friday after digesting the positive stocks number from Thursday’s supply/demand report. The new crop number continued its decline and is estimated at 460 and we still need to contend with the snow and cold destruction from the weekend. It was pointed out that North Dakota is the 4th largest soybean producing state. So I mentioned Sunday that the China trade news was positive on Friday and it was immediately brought to my attention to consider the “source”. Of course that is exactly what happened overnight. A strong start to the trade on Sunday night fairly quickly decided it was not impressed by the trade situation and went south. There is a partial recovery going on this morning but needless to say the market is not on fire. WE are also contending with the story that North Korea has been hiding the fact that their pig herd is also being hit hard by African swine flu. Technically the charts have avoided any negative numbers and analyst look at the 967-970 area on the November futures as an objective. It is evident today that the market must grind through 950 first.
December cattle gained 137 last week and the cash trade did its part higher as well. I like the way the cash had a bit narrower range from 109 in the south to 111 in the north. I also saw it pointed out that each day brings us closer to seeing the Kansas Tyson plant back online. Back to the futures, the December contract did make its highest weekly close in two months, hmm that takes us right back to the date of the afore mentioned fire. The December contract topped 113 this morning so 11390 becomes nest resistance. The reason I mention this is that I have not mentioned put options for, you guessed it, the past two months. Now I do see that the December 110 and 111 put options are trading plus or minus two dollars. Think about that.
October milk futures were up almost 70 cents for the week finishing near 1875. That my friend is a nice gain and was attributed to declining cow numbers and China interest. Even though butter prices slipped it was reported that “the cheese market tones are resolutely bullish”. Keep up the good work.
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