Market Update 12/15/2020

Monday December 14, 2020

US$ 90.94 up .24 for the week. Not a big deal.



Corn futures gained 3 cents last week and the March futures contract avoided the dreaded 414 support number.  There was fairly good strength Sunday night in the market but has turned pretty much steady this morning.  The USDA report changed absolutely nothing and that is probably what they should have done.  So, it was nothing to feed the bull market if that is what we have.  I find it interesting that most all the export sale reports for the last two weeks have been corn going to Mexico.  My point is that if China should come back in to buy it would be extremely friendly to the market.  Never old your breath.  Do some thing in small steps.  December 2021 corn futures hit 414 overnight and even at 410 this morning presents some opportunities. 


January soybean futures lost 3 cents for the week.  The USDA report was simply not as positive as it needed to be.  Yes, they did reduce the stocks number 175 million bushels, but the average estimate was 168 million bushels.  Therefore, funds continued to liquidate contracts after the high of 1178 on the January futures.  What does this mean? In my opinion probably several things.  First the market was technically on the high side of trade and came down.  Secondly, as mentioned above the stocks number was above the average estimate.  However, the stocks to use ratio dropped again and will get traders attention at some point.  That may not be until after the January supply/demand report or until funds consider their position adequately evened up.  I will point out that November futures at 1050 plus gets producers in the 975-1000 sales range… 


The February live cattle contract gained 85 cents last week so would have to be described as sideways as it lost 85 cents the previous week. Cash trade is stuck in the 108 range and yes beef cutout values plunged again last week, we are talking in the 14-20-dollar range.  But here is the thing the movement has been phenomenal, and I mean on the positive side.  I personally do not recall boxed beef movement ever that large so that beef is going somewhere. Considering the holidays approaching I am tempted to put my head in the sand until next year, especially since the futures market is less than sideways.  Also, due to the market structure I believe that it is telling us that supplies do contract all next year.  Oddly enough even the June and August contracts are showing unexpected strength.  Higher anywhere is better. 

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.