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Turner’s Take Podcast: US-China Tensions Flare Up Again
Turner's Take Podcast

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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*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
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Twitter: @Turners_Take

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Turner’s Take Newsletter & Podcast – Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.

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This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

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About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.

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