February 22, 2019
Donald Trump announced his tariffs in May of last year. Six weeks later, Soybeans had dropped $2.40 from a SOLID $10.50 down to $8.10 a bushel…And subsequently MADE THEIR LOW ON JULY 16, 2018.
In spite of repeated escalations in the trade war rhetoric well into winter, Soybeans actually have been climbing since last summer. AND MY STRONG GUESS IS THAT THIS STEADY UPWARD GRIND IN PRICES COULD EASILY BE DUE TO THE CHINESE QUIETLY BUYING FUTURES, AS FAR OUT AS POSSIBLE, EVER SINCE THOSE 2018 LOWS...And they would love nothing more than to next see this market $3-$4 higher...Really, if you were them, THE BIGGEST IMPORTERS ON THE PLANET, why WOULDN'T you being BUYING at these prices when you KNOW you will use the Soybeans?
I think the odds of an explosion in this market have gone through the roof…especially when I note that I have heard NOTHING but bearish rhetoric regarding the Soybean market for months on end…with analysts repeatedly advising farmers to sell more and more of their crop production (even out as far as 2020!). And more importantly, they are also advising farmers to have their sell orders in above the market in the event it does start moving higher…TO ME, THIS IS JUST A CLASSIC AG COMMODITY SITUATION IN WHICH ALL OF THE NEWS HAS BEEN NOTHING BUT ULTRA BEARISH…AND EVERY ANALYST AND FARMER IN THE COUNTRY IS THINKING NOTHING BUT, “WHERE CAN I SELL?”…WHICH IS PRECISELY WHAT I HAVE SEEN AND HEARD AT EVERY MAJOR BOTTOM DURING MY 39 YEARS OF PLAYING THIS MOB PSYCHOLOGY GAME…And that old psychology related adage, “It is ALWAYS the most bearish at the bottom”, IS true.
I have always considered Soybeans to routinely be the biggest trade that you can make in this business…And the chart following is my real perspective as to why…
Again, ALL I hear, everywhere, are advisories as to where to “SELL!”…and not a word about where we might be going on the upside…NOTHING! And believe me, I may just be an old hack commodity broker, but I swear, that IS the way this stuff goes…That IS the way it’s been at every bottom I have ever seen…And I would also point out, one more time, that in spite of nothing but bearish, bearish, bearish news for the last 9 months, IT IS SIGNIFICANT THAT SOYBEAN PRICES HAVE BEEN STEADILY CLIMBING SINCE EARLY LAST SUMMER.
And I shouldn’t need to tell you that it certainly makes sense to be in this NOW…BEFORE the Trade War “officially” comes to and…which it WILL.
I urge you…Get some of this now…After all, the truth is, we ARE just one semi-decent day away from new highs for the year…And I DO think that new highs will just be the START of something MUCH, MUCH bigger.
Here’s one way to go…And I DO think this thing IS ready to explode…literally ANY day now…which is why I am sitting here trying to show you all this…to show you what I see…and why I am so jacked up about this trade.
There are a number of ways to do this…one being Ed’s old “explosion position” approach which some of you will be familiar with…And I am even using futures…So, what I’m saying is, IF YOU HAVE TAKEN THE TIME TO READ ALL THIS…and if you would ever make a trade in this insane futures arena…then pick up the dang phone and call me…
I might be dead, dead wrong, which, as I always am obligated to remind you, can mean losing every dollar you put on the table…But I am LOADING UP. This is KING SOYBEAN…and like I said, I don’t think there is ever anything bigger in this biz, and also, like I said, I REALLY think it pays to be there BEFORE the action starts.
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Soybeans