Morning Comments October 16, 2020

Harvest 4

Opening calls:

Corn 3 to 5 higher 

Beans 6 to 8 higher 

Yesterday, both corn and beans closed higher, and extended gains in the overnight trade. December corn futures gained more than 7 cents, closing at $4.03 yesterday. This is the first time in quite a while that the lead month has closed over $4. Interesting to note that while July futures were also higher, they only gained 3 cents, closing just over $4.09. This narrowed the spread between these futures months significantly, and it’s narrowed even more overnight. At the morning break, there are now only about 4 cents between the two. It’s kind of hard to make a case to hold corn for 6 months for only 4 cents. 

Soybeans futures were mostly higher yesterday, with January up about a nickel. July futures were actually lower on the day, losing a penny, further inverting that spread. At the morning break, January corn futures are about 20 cents *higher* than July futures. With all of our locations showing a current cash bid of more than $10/bushel, it’s even harder to make a case to hold soybeans for very long, with most of these locations posting a cash bid for February that is 20 cents less than current prices. 

As we mentioned earlier this week, the managed money funds continue to hold fairly sizeable LONG positions in both corn and beans. At some point, they will need to reverse courses by selling. If they are LONG, and you are LONG, that usually doesn’t add up to a great scenario for a very long time. Keep putting in your offers, and letting us know your targets, whether that is a price or a date on the calendar.