Early Market Talk October 6, 2020

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Markets higher overnight led in part by growing concerns toward South American dryness. Still extremely early in the growing season but futures markets are largely a “What If” market.

At 0600 CZ20 up 2¢ at $3.81 ½ with SX20 8 ½¢ higher at $10.30. Both with uninspired volume of 11 and 15K contracts. KC wheat a scratch lower after sharp gains yesterday.

Dow futures up 18 at 28,014. Crude 49¢ higher at $39.71. Little change on US $.

Weekly crop progress report has corn harvest 25% complete up 10% from a week ago and compares to the 5 year average this date of 24%. Soybean harvest at 38% nationally up 18% on the week. Normal this date 28%. Iowa soybean harvest 55% and 35% ahead of the five-year average.

SX20 trading at critical level this morning. Right at technical resistance point and just below last weeks high. Some may want to suggest developing Bull Flag formation. Others looking at seasonal highs as made. One thing for sure, this is not going to be a sideways market over the next couple months.

Managed money holding a record net long position in soybeans. Just where is the emotional pendulum this morning.

Near complete dryness across the Midwest next 6 – 7 days. Basis values have largely eroded to what is suspected to be seasonal lows. Interesting to note soybean Open Interest in SX20 nearly equals that of SF and SH.

Working up some potential corn balance sheet scenarios last night. It’s amazing to see we have lost potentially 1.3 billion bushels of carryout in five months.

Initial carryout forecast in May was 3,318 mln bu and quite likely near 2,000 mln bu Friday.

Interesting to see how SX20 trades once the big boys get in the sandbox this morning.

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