Play Turner’s Take Podcast Episode 209

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

New Podcast!

In this week’s episode we go over the recent developments in the US-China trade negotiations and how it is effecting equities, grains, oilseeds, and livestock.  We also talk about sugar at the end and why we like it from the long side in 2020.  Make sure you take a listen to this week’s Turner’s Take podcast!

Macro Markets

Around 11 this morning the markets sold off due to reports the US-China Phase 1 trade deal might not get done by the end of the year. The stock market looks like it hit strong resistance at the red trend line and now risks a corrective move lower.  The stock market is still in an uptrend but could sell off to 3020 and still be above the last break out point.  Major support at he low end of the red trend line is about 2930, which represents almost an 8% correction if we test the bottom of the range.  A close above 3140 would be a break out above the trending range.

Continuous Emini S&P 500

Grain & Oilseeds

Ag markets sold off for the most part after the US-China news.  After the Reuters story came out a source in the Trump Administration said talks were going well and they are confident in getting a deal.

We think corn is going to bottom out at the end of Nov/early Dec.  During periods of adequate to burdensome supply, corn tends to make lows as we come into delivery periods.  Take a look at the chart below.  Those circled lows are right around First Notice Days.  A lot of farmers need to either price or roll corn by Wednesday (a week from today).  Next week will be low volume due to Thanksgiving.  Dec Corn could go to $3.60 or lower. If it does we like buying March futures or buying calls (and maybe selling puts too).

I like buying March Corn at $3.70.  If CH20 gets that low the $3.70 calls should be around 10 cents.  We also like selling the $3.70 put for 10 cents and then either buying two $3.90 call or three $4.00 calls.  It would be around even money.  The idea is we are comfortable being long March Corn at $3.70 (being short the put) but it also lets us be long 2 or 3 calls for free IF the market rallies later this winter.

Continuous Weekly Corn

Livestock

Feb Hogs are really getting beat up on the US-China trade deal break downs. The market is not confident that China will buy as much pork from the US as once hoped.  We are heading into major support around 65.  Hogs have been lower six days in a row.  Cash prices and carcasses were stronger today but on light volume.  Heavy weights and supply weigh on pork/hogs but we do have exports tomorrow. Feb Hogs look like they are getting to a good value but we really want to see 65 hold.  A break below and we will continue to see more selling.

February Lean Hogs

Sugar

I think Sugar could be the most bullish market for 2020.  Prices should be supportive as global supply tightens.  India had a large decline in production and that will be supportive for much of 2020.  Consumption is predicted to outpace production next year and could drop global ending stocks by 7mm mts.  This will not create a shortage of sugar but it the tightening of the balance sheets could send sugar to the 13s or 14s next year.  March Sugar highs back in the Spring were around 1460.  Sugar closed today at 1272

I like buying futures. I also like buying calls and selling puts.  I like selling the 1250 put in march and buying the 1325 call for even money or better.