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Veteran Advisor

Floor Talk October 26, 2020

At the close:

At the close, the Dec. corn futures finished 1 1/2¢ lower at $4.17 1/2. March corn futures ended 1 3/4¢ lower at $4.18 1/2.

Nov. soybean futures settled 4¢ higher at $10.87 1/4. January soybean futures closed 2 1/4¢ higher at $10.83 1/4.

Dec. wheat futures closed 12¢ lower at $6.20 3/4.

Dec. soymeal futures closed $3.20 per short ton lower at $389.60.

Dec. soy oil futures ended 0.35 cent higher at 34.46¢ per pound.

In the outside markets, the NYMEX crude oil market is $1.32 per barrel lower (3.31%) at $38.53. The U.S. dollar is higher, and the Dow Jones Industrials are 753 points (2.55%) lower at 27,582 points.

Britt O'Connell, Cash Advisor for Commodity Risk Management Group, says that the commodity complex is carrying a softer tone to kick off the week.

"Overnight markets saw corn and soybeans trading higher and faded into the early morning hours. Soybeans set a new contract high overnight and corn tested Friday's high. Both of these markets have seen a tremendous push on the long side from the funds, amassing over 200,000 contracts in both corn and soybeans. Both U.S. and South American weather patterns look amicable to field work, harvest here and planting there. That paired with a slight slowdown in Chinese purchases have the markets on thin ice," O'Connell says.

She added, "Without continued bullish news, these markets are vulnerable to a correction lower. We continue to note the slow pace of farmer-selling with both basis and spreads doing a lot of work to get bushels moving. This will be an interesting trend to monitor, as we get into the back half of harvest. Can the market really be calling for all of its corn now? I feel a reckoning coming, something is going to have to give," O'Connell says.

 

Mike

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At 9:19am:

 

For what it's worth, here is a snapshot of Friday's CFTC Report:

 

The CFTC Commitments of Traders report shows that funds are buying the ag commodities.

Corn= 48,000 contracts were added, making the outside investors now long 218,000 contracts.

Soybeans= 5,000 contracts added last week, now they are long 231,000 contracts.

Wheat= When all three exchanges are combined, the funds are long by 95,000 contracts.

 

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At 8:48am:

 

The Monday market story is here.

 

Investors sell the market, to start the week.

 

Mike

 

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4 Replies
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Senior Advisor

Re: Investors sell the market, nonetheless......

Investors sell the market this morning, nonetheless, I sold some corn for $4.22 earlier.

With regards to the COT, under producers/processors short, farmers sold 497,165,000 bushel of corn last week (old) and 57 million (other) as of 10/20.  

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Honored Advisor

Re: Floor Talk October 26, 2020

Marketeye, I've brought this up before but since no one ever answers, I think it is probably a very important question. There are over 1.3 Bbbbillion bu of soybean spread trades in place. About 400% of the carryout. The obvious implications in terms of manipulation and market distorting signals are huge....

So, since the CFTC will not share with the public WHO is doing this spreading, pretty sure it impacts market transparency. 

(this might explain why there is no carry in the market....kind of a duh...)

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Senior Advisor

Re: I'd like to hear a more detail discussion of this spread trade thing.

nt

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Honored Advisor

Re: Floor Talk October 26, 2020

Pete Meyer talks to Chip about the lack of carry in both corn and beans at 18 minutes. He says ethanol is competing with exports and oil is a $40 market, so that kind of puts a cap on ethanol. 

S.A. weather is going to be more closely watched this winter, 2 months ago 88 million acres of corn needed next year, now sounds like 95 million, so acreage battle.  Soybean carry "looks like black diamond ski run"  Smiley Happy

https://www.agweb.com/agritalk

 

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