Market Update 12/21/2020

Monday December 21, 2020

US$ 89.98 down over .9 for the week. That is a low number!

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Corn futures gained 14 cents last week presenting more opportunities. The December futures contract hit 420 this morning which in my opinion should slow the rally just from a technical resistance number.  It is a good thing anyway.  A couple of things to watch as we go toward the end of the year with two shortened trading weeks.  One would be to take advantage of the best basis levels you can find and right now that appears to be in the March delivery time frame.  Another is that if a sale works for you then look at a call option position to maintain ownership through spring.  On the export side keep in mind it is extremely important for those numbers to keep coming in.  The inspection report this morning was not adequate. The last and certainly not the least important is weather.  There continues to be inadequate moisture in a lot of places around the world. 


January soybean gained 60 cents last week which is the best in many months if not years.  It is my thought that export inspections continue to be right up near the top of expectations and with the sales on the books that is important.  Perhaps more important is the weather in South America.  It is not perfect.  At the same time there has been some worker strikes in Argentina causing a disruption in movement.  And here in the US it seems too early to be concerned about the drought monitor and subsoil moisture but I’m not sure the market agrees.  The other thing that happened last week was that traders saw a slight pull back, then looked again at that carryout number and the stocks to use ratio which are both on multi year lows.  So the funds continued their buying ways. 


The February live cattle contract gained 155 last week and the cash trade was reported pretty much 105-108 depending on the region.  Then why are the December futures trying to get to 111?  One theory would be that the cash market is going to be crazy high between now and a week from Thursday when that contract expires.  Let’s not count on that theory.  The other theory would be that the futures contract is going to crash between now and then.  Slaughter rates slowed slightly the past two weeks and of course with shorter weeks that will continue.  Therefore my idea is that the two will meet somewhere in the middle with a 2 dollar advance in cash.  Anything is possible, weather and demand will be in the forefront, if we feed cattle bigger the demand better be the leader.


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