Early Market Talk October 16, 2020

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A demand led bull market. Long time since we have seen one of those. Trade continues to play “What If” scenarios with China demand. Some suggesting lofty estimates on both soybeans and corn. Anybody out there see some shades of 95/96 creeping in?

At 0600 CZ20 2 ½¢ higher at $4.06 making a new high for the move overnight at $4.07 ¾. SX20 up 5 ¼¢ at $10.67 ½ and yet to eclipse last weeks $10.79 ¾ high. Solid vol totals again on these two contracts of 38 and 22K respectively. KC wheat giving up some ground.

Dow futures up 79 points at 28,465. Crude off 46¢ at $40.50.

Referenced 95/96 above. A lot of interesting things were happening in the mid 90’s. Record crop in ’94, big Chinese corn purchases and a new farmer contract called an HTA.

Funds credited with buying 25K corn yesterday and now estimated long 192K contracts. Credited with buying 8K soybeans bringing that net long to a record 252K contracts. Updated CFTC data this afternoon.

Trade debating need for more bean acres next year. Soy / corn ratio has been tightening since July and stands near 2.63 this morning.

Dalian corn futures hit a high for the move Wednesday at the US $ equivalent of $9.33 / bu. Has backed off the last two sessions.

CZCN corn spread at 4 ½¢ this morning equals the tightest that spread has traded since June of 2019. If you recall we were losing the entire corn crop at that time. The only year that the CZCN inverted since 2007 was the 2012 drought year. CZCN inverse that year peaked at 27 ¾.

Export sales numbers at 0730 and should show some big totals.

FND on SX20 two weeks from today. One contract registered for delivery.

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