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Mark's Market Talk

October 12, 2020

The USDA released their October supply and demand report last Friday and it confirmed the US has a shrinking stockpile of corn and beans. However, the question is whether they were reduced enough to maintain the rally we have seen during the early part of harvest. They reduced the corn acres a million, mainly prevent plant from the Dakotas that was missed in an earlier report. They held the yield close to the previous report at 178.4. After reducing domestic consumption 100 million they ended up with a 2.167 billion carryout. We need a sub 2 billion number to get the trade really bullish and today that may not happen unless yields come in below expectations. Exports have been very strong, but we are losing our price competitiveness to other countries that still have corn for sale. Right now, the eyes are on South American weather as dryness is causing planting delays for the beans which in turn will delay their safrinia corn crop later. For the week Dec corn closed 15 cents higher. We did not close above 4.00 on the front month and in order to get the funds more exited we will need to do that in the coming week. On the bean side the report lowered acres 700,000 while leaving the expected yield at 51.9. After making an export adjustment the carryout dropped to 290 million bushels, which was bullish the market and beans for the week closed 45 cents higher. Rarely do you see a rally like this during the heart of harvest. An estimated 60 percent of this year’s beans have already been sold, and more are being sold every day right off the combine. We have an inverse staring us right in the eyes on the future months. There is no carry in this market and little reason to hold beans unless you truly think they will head to 11 on the board soon. Both sides have their reasons why they think the market will move either higher or lower. The funds are extremely long right now and currently they are protecting their position. The bears are pointing out that we may be getting top heavy and a correction is due. The Nov/March inverse improved about 7 cents Friday which leads you to think we may be peaking at least temporary. However, with the massive farmer selling we are seeing it comes to mind that prices normally get better once the product leaves the farmers hands. This may hold true this year, but I would not pass up 10.00 on all my beans right now.
 
Posted: 10/12/2020 2:27:13 PM by Rob Matherly | with 0 comments


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