Market Update 10/5/2020

Monday October 5, 2020

US$ was down .76 ending at 93.91

Follow through selling this morning doesn’t hurt



Corn futures gained 15 cents last week due to the reduction of supply estimates on Wednesday’s USDA report.  The supply number came in at just under 2 billion bushels and, needless to say, was a surprise to traders.  Now what?  The December futures contract made a new high from the recent lows and so technically is in nice shape.  I would agree with most analysts that the harvest low is in place and support under the contract is probably in the upper 370’s with resistance in the upper 380’s and then 394.  There are now guarantees that USDA will adjust the tables as much on this Friday’s monthly report, so it doesn’t hurt to remain defensive. Basis levels are decent and once all of the old crop is gone perhaps, we see December 2021 above 400.


November soybean futures gained 18 cents last week and yes, the supply number came in Wednesday lower than trade estimates giving the market its second surprise for the day.  A couple of points to take note of are that the stocks to use ratio is slightly below 10% which is getting positive.  However, the futures market did not trade above the recent high of 1046 plus which has to be considered negative. Dry weather in Brazil is slowing planting, so the potential supply there is a question mark. Fund buying continues to support the market but they will want to see continued large export sales reported which needs to be confirmed in this Friday’s numbers. Lastly but not least is the fact that harvest is progressing rapidly and once that gets like 80 percent complete it could be of case of “where’s the soybeans”? 


The December live cattle futures lost 30 cents last week and the extreme cash at 109 was definitely 2 higher with the bulk of the sales sub 108.  October futures contracts begin delivery this afternoon and are between 108-109 so will be tied pretty close to the cash.  December futures are trading near 112 this morning but in my opinion don’t need to explode higher at this point in time.  The good news is that demand is decent.  Boxed beef has been steady with near excellent movement and for this time of year that is a success.  And more good news going out to the April futures contract we see right at a 118 high today.  Of course, feedlots are going to need every bit of it. 

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.