January 25, 2022
The situation in Ukraine, which is a large grain exporter, has run the grains up sharply since last week, with Corn having rallied almost 30 cents and Wheat up about 90 cents.
I think the moves in both markets HAVE BEEN classic “artificial” commodity rallies wherein a singular event runs a market hard on the upside as the news becomes louder and more and more front page…thus inspiring a LOT of speculative buying. But what often then happens, once the anticipated event finally becomes a reality (or doesn’t even), is that SUPPLY SIDE SELLERS RE-ENTER THE MARKET and suddenly that already long overload of speculative money, expecting higher prices, then has nowhere to go but OUT (selling), thus resulting in a move back down that is often faster than the move up.
I think the odds are quite high to see that happening RIGHT now. I mean, let’s face it…Whatever the outcome in Ukraine, I don’t think we’re beginning the next nuclear war, or while there may be some military activity inside Ukraine’s borders (or NOT), I don’t think we’re about to see any real “war” at all. In other words, I think there is a very temporary, and quickly finalized, aspect to this conflict…and that being the case, I WOULD EXPECT TO SEE CORN AND WHEAT GO STRAIGHT BACK DOWN…AND THEN SOME.
But that being said, if I am wrong, and this actually does become an event of some great magnitude, the flip side is that both of these markets could go rocketing out of here...which makes this THE PERFECT SITUATION TO USE THE BOTH SIDES APPROACH, the bottom line being, WHAT WE WON’T DO IS JUST TRADE SIDEWAYS. For the moment, I am focusing solely on Corn as this IS the market that I believe has the greatest leverage of the two.
Get Short Corn HERE…
It’s all about the numbers…so here they are…
Here’s the trade…or one way to do it…
And if you want more detail on “How Corn Declines,” that 25% almost straight down declines ARE routine, here’s a link to my last newsletter with 50 years of histories. http://www.crokerrhyne.com/newsletters/01-23-22.htm
Take advantage of this rally. Give me a call if you’re interested…
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, Wheat