Early Market Talk October 7, 2020

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New highs in soybeans yesterday setting a pretty lofty upside technical objective. Funds credited with buying 20K contracts and now long a record net 270K contracts.

After early weakness markets have turned into the black. At 0630 CZ20 up 3 ¾¢ at $3.88 ¾ with SX20 up 4¢ at $10.48 and a nickel under yesterday’s high. KC and Chi wheat both a couple higher as well.

SX20 breaking out to the upside yesterday brought another wave of technical buying. Open interest in soybeans up near 8K contracts yesterday. Developing concern on SA weather a lading contributor to overall price strength. A lot of time for conditions there to change.

USDA Supply / Demand report Friday. Incorporating September stocks data and tweaking demand can come up with a soybean carryout under 300 mln bu. Friday’s report is either going to make or break this rally. Like chart action yesterday, this is not going to be a sideways market the next 30, 60 or 90 days.

Wide open week of harvest with warm dry conditions. Traveled a long stretch of Hwy 20 yesterday west of Ft Dodge and could count unharvested fields on my fingers. Can’t recall ever seeing as much harvest dust in the air either.

Long term weather forecasts for Argentina continue the dry side and has futures pricing in additional risk premium. Tighter US balance sheet potential leaves no room for southern hemisphere problems to develop.

Goldman roll starts today and runs through next Tuesday. Open interest in SX20 at 393 contracts and has been declining the past two weeks. SF and SH oi at 180 and 187 and increasing.

SXSF traded in to ¾¢ carry overnight with a last trade of 1 ¼¢. FND three weeks from Friday.

Funds long 145K corn, 270K soybeans, 95K meal and 97K sbo.

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