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In this podcast we go over our how we plan to sell $4.30 new crop corn (on the board) and how we can use the same strategies for wheat. This is not the time to sell soybeans so we will be patient for better prices. We think hogs can run higher in the spring and summer months. We think cattle is breaking down. Make sure you take a listen to this week’s Turner’s Take Podcast!
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Grain & Oilseeds
Funds bought over 20,000 contracts today as March corn closed over $3.92 resistance. This opens up prices to go higher on further short covering and technical buying. Old crop basis is strong. This morning corn sales were reported to Guatemala and an unknown destination. Some think corn went to South Korea. Others think it went to China! While this is all good news we are hearing US corn quality is an issue and Asian destinations are looking to the Ukraine for higher quality. That could slow down US exports.
While old crop is still a bullish story due to the basis, it is hard to see March trade above $4 for any length of time. Farmers should use rallies to sell new crop. I like buying old crop on breaks to $3.80 or lower and trying to make a nickel or dime. I am hearing a lot more about 94 to 96mm acres of new crop corn this year. Below is a supply and demand table for 92, 94, and 96mm with a trendline yield. If 96mm acres is correct, then new crop should be close to $3.00 at the harvest lows later this year. It is $4 now. Take a look at the table below and then take a look at an example of how it could be possible this year to sell $4.30 new crop corn.
Turner’s Take 2020-2021 Corn Supply and Demand Scenarios
How to Sell $4.30 New Crop Corn
Dec 2020 corn is over $4.00 right now. Lets say you sold some (at least 5000 bushels) at $4.00. Lets assume the 96mm acres is true and we have close to a trendline yield. The balance sheet balloons out to almost 3 billion and next fall Dec 2020 corn could be in the low $3s.
If corn is that low and stocks are that burdensome, Dec 20 to July 21 will be close to full carry. That could be 30 cents. When we get close to First Notice Day at the end of November, we roll to July which could be about 30 cents higher. The farmer must be able to store their new crop corn. We add that 30 cents to our futures sales price. $4.00 Dec 2020 corn + $0.30 cent roll to July 2021 = $4.30 new crop corn.
If you want to know more about this strategy then call me at 312-706-7610 or email me at cturner@danielstrading.com. New crop corn is above $4 because old crop basis is strong. Once we have a harvest in S. Am and then start planting in Ukraine and the US, prices could come down fast.
The chart below shows where we could see harvest lows based on 92mm, 94mm, and 96mm acres and a trend line yield.
Dec 2020 Corn
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Craig Turner – Commodity Futures Broker
Turner’s Take Ag Marketing: https://www.turnerstakeag.com
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Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.
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