May 22, 2017
These opinions are my own and I may be dead wrong about everything I think is about to happen…
During the past 7 trading days, we have seen rallies of approximately 45 cents in Corn, 65 cents in Wheat and 50 cents in Soybeans.
I believe that a combination:
---Of abnormally wet weather…
---AND the market’s having already accounted for all of the negative aspects of Trump’s trade war…
---AND record world demand…
---AND knowing that with none of these crops having yet to be even fully planted, much less harvested, weather could end up being an ongoing bullish factor…
---AND with the fact that all I seem to hear from advisors everywhere is, “SELL your crops into this rally!”
---AND with Speculative Funds having RECORD Short Positions…
For all those reasons, I think the rallies in all three markets are JUST GETTING STARTED.
All three of these markets have histories of periodically making multiple dollar sized moves and that is what I think we are going to see during the next 2-4 months.
I continue to recommend buying Corn, Wheat and the Soybean Complex…as always, using the 2&1 approach frequently outlined here.
My particular emphasis, due its history of having at least one 22% rally in 18 of the past 20 years between January 1st and expiration, is in the August Soybean Meal contract…Obviously, just because Meal has had these rallies does NOT mean we will see the same this year, but those are the stats that influence my opinion to focus on this contract.
Here are the latest charts…
Here is my primary recommendation…If Meal goes dead sideways, you could lose everything you have invested…Conversely, if we drop about $20, you should be able to recoup 100% of what you have spent…And if I am right about the upside, I assure you that whatever you have spent on the put will NOT be missed.
And here are the stats for this contract going back for 20 years.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST PERFORMANCE. WHATEVER THESE CONTRACTS HAVE DONE IN THE PAST DOES NOT MEAN THEY WILL DO ANYTHING SIMILAR IN THE FUTURE.
Rallies in August Soybean Meal, January to Expiration, Past 20 Years
Give me a call if you want to know more about any of this.
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: Soybean Meal, Soybeans, Wheat, Corn