Play Turner’s Take Ag Marketing Podcast Episode 247
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Soybeans are back, baby! After reviewing the WASDE, charts, seasonals, and fundamentals, we’ve concluded soybeans are back to where we were before the tariff trade war and before the Chinese swine flu disaster. Before those events happened soybeans traded between $9.00 and $10.50, with summer rallies (US or South America) making $12 possible. In this podcast I make the case that soybeans could be back in that trading range for the rest of the year and for 2021. Make sure you take a listen to this latest Turner’s Take Podcast!
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WASDE Thoughts
The report was bearish for wheat, neutral for corn, and bullish for soybeans. Fund money is coming into corn and we can see corn trading another 5 to 15 cents higher. Export demand is stronger, yields will probably come down again, and you can’t discount the fund money coming into the market as an inflation hedge.
In the short term we can still go higher until harvest ramps up. Ending stocks are likely to come down between now and the January WASDE but it is hard to see it go below 2 billion. Front month corn cold trade to $3.80 if Chinese demand continues. Otherwise we will be waiting to hear about yields from the field to get a handle on the crop size.
I do like buying far out courage calls in March, May and July of 2021 corn. La Nina is likely to happen this winter and that tends to cause dry conditions in Argentina and parts of Brazil. In past La Nina years South American production has been lower. I think we should use the breaks to buy calls in the in the 2021 contracts.
As for soybeans, ending stocks were 456mm bushels and likely to go lower. We see Chinese demand increasing and yields coming down another bushel per acre. If soybean stocks get into the mid 300s (and that is our view), then soybeans should be in the high $9s to mid $10s for a while. If South America has issues to to La Nina, soybeans could trade to $11 and maybe $12. I would use any harvest pressure to start buying calls to sell into later this year or in 2021. I also like the March 21 vs Nov 21 spread for hedge and spec traders.
Finally, I thought wheat was bearish and that the corn and soybeans should gain on wheat. Spread traders should look at corn vs wheat spreads to come in for the rest of 2020.
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Corn Supply & Demand
Soybean Supply & Demand
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Dec 2020 Corn
Continuous Soybeans
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Dec Corn vs Dec SRW Chicago Wheat
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Craig Turner – Commodity Futures Broker
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