Play Turner’s Take Podcast Episode 233

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New Podcast

New podcast is out and it looks like US-China relations are heating up again.  China is planing new security laws for Hong Kong that would seriously jeopardize their independent status.  The US gave Hong Kong special status so it did not have to come under sanctions imposed on China.  If Hong Kong effectively becomes part of China then the special status may be revoked. The concern is this could lead to a renewed trade war between the US and China. If you want to know more and how this could effect our views on soybeans, then make sure you take a listen to this week’s Turner’s Take Podcast!

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Corn

*Filled today on 10% of estimated 2020 corn production at $3.40 basis Dec futures.  Next target is $3.50 for another 10% of estimated new crop production.

Corn rallied on fund short covering and spread unwinding (short corn vs long wheat and soybeans).  The ethanol report was supportive today and the President announcing a press conference about China did not do soybeans any favors.  We think this rally in corn is one to sell into.

Our supply and demand tables below has corn ending stocks at 3.3 billion.  That is with a reduction of 1.5mm acres.  The loss of production will be offset by the loss of corn for ethanol demand.  The USDA still has to lower ethanol demand by 200-300 million bushels and that will offset the loss of corn acres.  The USDA will most likely keep their trend line yield for corn in the June WASDE.  With a 70% GD/EX rating and good weather so far this season, traders will start to factor in trend line corn yields or higher.  The coming heat will be good for crops.  The soil moisture in the Midwest make drought unlikely.  The biggest risk corn will face this year is during pollination, which is a concern every year.

I like selling the Dec $3.60 call and buying the Dec $3.30 put as a spec trade and a hedge.  I don’t mind being short Dec 2020 corn at $3.60 and I think by harvest we are going to be $3.00 or lower if we are anywhere near 95mm acres planted and a trend-line yield.  The spread is trading at about a 1 to 2 cent debit so we will need a little more of a rally to get filled.  Margin is around $800.

***For us to turn into corn bulls we would need to believe carryout will be 2,0 billion bushels or below.  In order for that to happen we would need to lose about 15 bpa in yield.  That would put us at 163.5.  We are off to a much better start than last year and we yielded around 168.**

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Dec Corn Chart

Corn Supply & Demand Tables

About Turner’s Take Podcast and Newsletter

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Craig Turner – Commodity Futures Broker