Play Turner’s Take Ag Marketing Podcast Episode 249
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President Trump tweeted today that talks for a new stimulus bill have been put on hold until after the election. The equity and metals markets sold off after the announcement. We always that a pre-election stimulus deal in Congress would be difficult to achieve. Looks for stocks to bounce back for gold and silver. In the podcast we also cover soybeans and corn. Strong demand, tighter stocks, and adverse S.Am. weather could lead to higher prices this winter. The grain markets are likley to be elevated and volatile until early 2021. Make sure you take a listen to this week’s Turner’s Take Podcast!
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Soybeans
The October WASDE is on Friday and things could start looking tight as the trade looks for a 300 million carryout. Corn stocks could come down to 2 billion. Soybeans prices in the mid $10s are justified with a 300 million carryout, strong Chinese demand, and potential S.Am weather issues. A major weather event that brings down production could send soybeans up another dollar or more. A great S.Am crop could bring soybeans back down to the high $8s/low$9s. Soybeans will remain elevated and volatile until the S.Am crop is made.
The talk on the trade desks today was about China coming in for more soybeans after their holiday. The market is also going to try to price in more US soybean demand for February. The delays in S.Am planting mean the harvest will be later. For soybeans to break through the $10.70s the market has to believe Brazil and Argentina soybean production is going lower. The $10.70 level was the highs made right before Trump announced the first tariffs on China.
Traders should look into old crop/new crop spreads on the breaks. I also like call spread in March and July.
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Corn
At face value a 2 billion corn carryout is not bullish. When you consider Dec Chicago Wheat traded $6 today and soybeans are over $10.40, then Dec corn testing $3.90 makes sense. If soybeans stay above $10 and wheat is above $5, then corn can easily trade above $4 in all months if carryout gets closer to 1.5 billion.
Corn demand is not as strong as soybeans. The next leg up for corn most likely comes from a supply issue while soybeans has better demand for both meal and oil.
On the breaks I like July 21 vs Dec 21 corn. The spread should hold its value for the next few months. In years when we do have tight stocks the spread can trade between 20 cents to over $1 inverse.
If you are interested in working with Craig Turner for hedging and marketing, then click here to open an account. If you are a speculative or online trader then please click here.
July 21 vs Dec 21 Corn
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Craig Turner – Commodity Futures Broker
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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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