June 17, 2021

 If this isn’t the beginning of a crash,

I don’t know what would be…

The Bear Market in Corn and Soybeans is underway…

In spite of ALL sorts of "dry weather" talk, and other ONGOING bullish gibberish about potentially “running out” of supplies, Soybeans have dropped $2.50 since late last week, including today's $1.20 lower close…And Corn has dropped $1.00 at the same time, again, in spite of weather fears AND a supposedly friendly USDA report last Thursday…As I have been fairly screaming, when seemingly every brokerage house “strategist”, “analyst” and agricultural talking head on the planet is touting the same bullish STORY, you’d better be positioning for crash in the opposite direction…because that IS what I have seen at EVERY grain market top for the past 40 years.

MY VERY STRONG OPINION IS THAT THE BULL MARKET IN CORN, WHEAT AND SOYBEANS HAS ENDED.

JUST BEING PRUDENT, WITH THE SIZE OF THE MOVES DURING THE PAST 5 TRADING DAYS, WE LIQUIDATED AND TOOK THE MONEY ON OUR SHORT POSITIONS AT TODAY'S CLOSE...temporarily.

I do NOT think this is over, by any means, and am immediately looking at how to reposition on the short side. Call me if you want to look at possibilities.

Today, virtually every major commodity we trade was sharply lower today… with Gold down $80, Silver down $1.75, Copper down 20 cents, Beans down $1.20, Corn down 40 cents, Hogs limit down 4.5 cents…not to mention a few others that were also down HARD. And I have little doubt that there are some monster margin calls going out right now that may lead to more of the same tonight and tomorrow morning.

But SIGNIFICANTLY, I THINK…ONE MARKET ON MY SCREEN WAS UP FOR MOST OF THE DAY…and ended the day barely lower, WHEN EVERYTHING ELSE WAS PRETTY MUCH IN CRASH MODE…AND THAT MARKET IS FEEDER CATTLE.

Sometimes the markets DO give you clues, and aside from the fact that declining Corn prices are definitely a bullish factor for Feeders, to see them just ROCK SOLID today while EVERYTHING else was in the tank, leads me to believe that this market was flashing a giant “BUY ME!” signal.

Maybe it’s just me talking my position, but I THINK THERE IS NO TELLING WHAT WE COULD SEE ON THE UPSIDE IN FEEDERS TOMORROW…AND IN THE WEEKS & MONTHS TO COME.

I CONTINUE TO STRONGLY RECOMMEND BUYING THE CATTLE COMPLEX…WITH FEEDERS BEING MY VERY FIRST CHOICE…HERE AND NOW.

Prices might be quite different tomorrow morning…but here’s one viable option at today’s close…

BUY CATTLE-SELL HOGS

This is a spread...and a margined futures trade only...where you Buy a Cattle future and Sell a Hog at the same time...When we were at zero, it meant that Cattle and Hogs were priced the same, which, to understate, was almost unbelievable, such that on June 2, I explained it as follows:

 Since “the beginning of time,” Beef has been more expensive than Pork. Aside from the fact that nobody is going to pay the same thing for a pork chop as they would for a ribeye, what really matters is that you can breed a sow, and in maybe a year’s time have TEN full grown market ready 200 pound hogs…AND you can breed that sow twice a year…But with Cattle? It takes about 3 years just to do the same with one mama cow…to breed her, and then…3 years later…you get ONE slaughter ready steer. No longwinded explanation here: Cattle have been, and always will be, more expensive than Hogs.

However, there are times when the markets just get totally out of whack, wherein long standing relationships between commodities get turned EXTREMELY upside down…which can represent “extreme” opportunities if you bet on a return to what has forever been the NORM…And that is exactly what we have now in Cattle and Hogs.

Give me a call and GET ON THE FEEDERS…! Big moves are all over the place…If you are still a commodity trader, don’t just sit there and WATCH.

Thanks,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Feeder Cattle, Live Cattle, Lean Hogs