August 16, 2022

First up, if you want to contact me, I will not be in the office after 10 AM tomorrow. I’ll be having cataract surgery , but according to the Doc, I should be right back to work the following day.

 Aggressively Shorting Corn and Soybeans…

Right here. Right now.

By my count, during just the past five weeks, we have had FOUR separate BOGUS weather-scare rallies in Corn and Soybeans, all of which have been inspired by the fact, I believe, that pretty much every analyst in the agricultural world is STILL only looking for, and touting, reasons to substantiate their belief that we are still in bull markets in both of these markets.…That even though, during the past 2-3 months, cash Soybeans have “surprisingly” (to them) dropped by as much as $3.50 a bushel, cash Wheat by $5.00, and Corn by $1.50, none of which was even remotely supposed to happen, all I continue to see from analysts is the same stale bullish rhetoric of “potential yield losses,” and “when China buys,” and “value at these levels,” and “the next technical support,” etc.…and NOTHING about where we might be headed on the downside. Nothing. Nothing. Nothing…Almost like going lower is just not possible.

I continue to believe that Corn and Soybeans have absolutely topped (for several years)…and expect to see them trading sharply and substantially lower during the next few months…And therefore continue to strongly recommend being short both of them.

My perspective is:  (1.) These past four “weather rallies” have likely exhausted the possibilities for any further temporary price jumps…I mean, how many more times can these guys scream, “Hot and Dry!”. with both of these crops so close to being made? (2.) My long repeated belief that China will NOT be doing any buying of significance until prices are a LOT lower (they aren’t fools)…(3.) With all the LOUD and unceasing bullish talk from analysts, my firm belief is that end users…buyers in other words…have likely covered 100% of their needs at least for the next 2-3 months…and therefore CAN’T really buy anything more in the near term, therefore resulting in what I’d classify as a VACUUM of BUYERS at current levels. (4.) The overwhelming majority of farmers bought into that same bullish story, and consequently, are now heading towards harvest having NOT sold/contracted much of what they already should have…the bottom line being, I believe, that there is an absolute AVALANCHE OF HARVEST SELLING DEAD AHEAD IN CORN AND SOYBEANS.

So…I AM STILL BUYING PUTS IN CORN, SOYBEANS AND SOYBEAN OIL…Here are the charts and options I would recommend at current levels…

 Here are the put options I’d recommend here…

 Still Buying Feeder Cattle

As for Cattle, all I seem to hear from analysts there is, paraphrased, “The consumer is just about broke and can’t afford to buy steak…or go out to eat…so there’s no way cattle prices can go up,” which, to me, is absurd. As I keep writing, yeah, prices have gone up…and yeah, statistically we HAD a recession…but the bottom line is job growth is going through the roof, wages are rising, and any “expert” who thinks the American consumer is at home on the couch eating beans and not out there spending needs to take off their blinders. For sure, it IS tough for some Americans, but generally speaking, as I am forever pointing out, when the roads, malls, airports AND restaurants are ALL JAMPACKED with people, it does NOT argue that the masses are “broke,” or that the consumer economy is grinding to a halt.

My observation has long been that the Cattle market marches to a different drum…that quite often, when the other commodity markets are “cooling,” Cattle seem to start heating up…which, with Feeders now making new 5 months highs…as row crops are rolling over…certainly seems to be the case right now…I would also add that the funds, which ARE major price drivers, appear to be evolving away from the long side in grains towards being short…but always DO seem to have SOME sector or market that they can get behind on the upside, and I think the Cattle market is right where they are headed.

I have forever observed that the meat markets routinely seem to make some truly “stupid” one way moves…that they can just run away non-stop at times…And that is what I am personally in this for right now…especially in today’s hot money markets.

As always, my recommendation is to cover the bases and do all four of these together…or minimally, three of them, using either Soybeans or Soybean Oil in that complex.

Generally speaking, I think that all of these markets really are JUST BEGINNING their moves…that, especially in Soybeans, nothing has really happened yet…but again, with harvest LOOMING…and all of the SELLING the markets DO have to absorb, I think there is no telling how big, and how fast, we’ll see Corn and Soy get hit.

Give me a call if you think this makes sense…It is NOT to late to get started…or to ADD.

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: Corn, Soybeans, Soybean Oil, Feeder Cattle