Play Turner’s Take Podcast Episode 241

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In this podcast we go over the effect US stimulus has over the US Dollar, metals, and the stock market. We then turn our attention to the seasonality of corn and soybeans during August. We also talk about the Corn vs Wheat futures spread.  To hear our ideas on the equities, metals, and grain markets, make sure you take a listen to the latest Turner’s Take Podcast!

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Macro Markets

The Fed announced no changes in rates today.  Earnings have been fairly good.  The US government is providing as much stimulus as needed.  Combine all three of these and you get a lower dollar, higher metals prices, and a supported stock market.  The Emini S&P 500 is now only 4% away from the pre-COVID highs.  The NASDAQ has already traded to all time highs.  We think stock will test 3400 again but it could be a massive resistance level to get through with coronavirus still hampering the economy.

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Emini S&P 500

Corn Supply & Demand Scenarios

Below are the corn supply and demand scenarios I talked about on the podcast.  It sounds like to us we are at a trend line yield or higher.  At 180.5 bpa ending stocks are around 2.8 billion.  A 182.5 national bpa put ending stocks at 3.0.  I think this means corn has harvest lows of at least $3.00.  I still like bear spreads, short futures, long puts, and short calls.  Call me at 312-706-7610 if you want to put together a specific trading plan for August.

Seasonally corn tends lower from now until first notice day (FND).  I think we see the same trend this year and corn most likely bottoms out between the last trading day of Aug (Sept futures FND) and the Sept WASDE on the 11th.  If yields are larger than 182 we could see lows not made until October.  For now it makes sense to get short/stay short as the analysts determine how big this crop is going to get.

Soybean Supply & Demand Scenarios

Soybeans are not as bearish as corn.  We are hearing reports of large soybean crops and with market will start pricing in a trend line yield or higher until proven otherwise.  GD/EX ratings are over 70% and a 51 or 51 national bpa is possible.  If soybeans are around trend, then the ending stocks will be about 440mm bushels.   A 51 bpa increases stocks to 524mm and a 52 bpa sends new crop ending stocks north of 600 million bushels.  A trend line yield should support soybeans at $8.40 during the harvest low.  If we start talking about 52bpa or higher then sub $8 is a short term possibility until we see demand (exports) pick up.  Short soybeans is one of my least favorite trading positions. I would rather wait for the seasonal bottom and get long.  In the mean time we can sell corn.

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