Early Market Talk November 17, 2020


South American weather anxiety continues to lead markets. While not dire today, what if scenarios running rampant with less than desired rainfall and US production totals that leave no room for a SA production shortfall.

At 0600 CZ20 3 ½¢ higher at $4.19 ½, SF21 13 ½¢ higher at $11.67 ¼ and the best level since 2016. Volume totals pumped up a bit over yesterday with 55K contracts trading on the lead two contracts of both corn and soybeans.

Dow futures off 159 points this morning at 29,708. Crude near unchanged at $41,31. US $ Index showing modest weakness.

Post Goldman Roll on CZ has CZCH spread trading into 6 ¾¢ overnight.

Dalian corn futures sharply higher yesterday and traded a scratch higher than the October 19th high. Touch firmer overnight. Dalian corn futures have only seen one month ever with a higher close than today’s price level. That was back in August of ’14 and had a high price of just over $10.00 US equivalent.

Funds credited with buying 20K corn and 11K soybeans yesterday. Now long an estimated 253K corn and 232K soybeans.

Weekly corn export inspections running 3% behind the pace needed to reach revised and record USDA annual target of 2,650 mln bu. Soybeans 7% ahead of the needed pace to reach USDA’s 2,200 mln bu target.

Highs in on corn and soybeans? One truth we have yet to see on both corn and soybeans; typically, at major tops and bottoms, that palpable, sick in the gut feeling of financial pain price action causes hedgers and producers. HTA debacle in ’96 and the situation the commercial faced in ’08 come to mind.

Price scatter work also suggesting higher price potential on soybeans. Next year, not hard to come up with a 200 mln bu bean carryout even with a 52 bpa bean yield. On November 17th that deserves some significant risk premium.

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