Market Update 10/26/2020

Monday October 26, 2020

US$ ended below 93.00



Corn futures gained 17 cents last week ending the December futures at 419.  This is a number many have been waiting for to sell, sell, sell.  It is a nice number and gets a cash price well over 350 in most areas.  So, let’s get to work.  As usual there are a variety of ways to take advantage of this market.  In no particular order but what might work best for your program.  A December 415 put option is trading around 10 cents and expires the day after Thanksgiving.  Secondly a cash sale out into January or February may catch you a cash price near 375, are you thinking now?  Along with a cash sale continue to consider call option ownership.  For instance, a 415 December call option is trading around 12 cents.  Of note this morning was that there were no export sales of corn reported and the weather in SA appears less threatening.  Time for action.


November soybean futures gained 34 cents last week and the sky is the limit.  Probably not.  However, this is an extremely interesting market.  The thing that catches my eye is that every time in the last 6 weeks that the market is down 10 cents there are buyers everywhere and brings it back up to make new highs.  Last saw the November futures contract trade a fraction above Friday’s high then falling back.  And again buyers were found in the 5-6 cent lower range.  Yes, there were export sales reports of both soybeans and meal.  And planting in Brazil has seen some much needed precipitation.  Because we are at the upper end of a trading range with resistance at 1100 take a close look at what this market means for you.  By using John’s revenue analysis, you may make an easy decision for your next step of marketing.  Call him, 320.761.0406, thank you.


The December live cattle futures lost 505 last week, this is a disaster and the problem I see is that the volatility that I believe the upcoming election will create is not in the producers’ best interest.  Cash trade was also a disaster with mostly a range of 105-106 with a disappointing trade in Iowa at 103-104.  I did believe that the market had found support last week but at this point who cares.  What could be wrong with buying an in the money put option for 375 and selling a put option 5 dollars lower for 175.  Now you have some protection in place until the first Friday in December costing 2 dollars plus fees just in case.  Here is what could prove me wrong.  Weather coming into the feedlot states, improved boxed beef prices and a boring election.  Do you want to take those chances?

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