May 24, 2023

 Corn and Soybean Collapse fully in gear?

Even though the highs in Corn and Soybeans were made a year ago, in the many months ever since I have yet to see a single “professional” agricultural analyst refer to the Corn and Soybean markets as being in anything but a bull market, with repeated commentaries referencing potential Chinese buying, weather concerns in just about every backyard on the planet, and detailed export/production “problems” in Ukraine, Argentina, Brazil and just about any other country you want to name…And with ALL of that ongoing bullish rhetoric being the US farmers’ only source of information, those farmers have quite understandably been reluctant to market (sell) their crops at prices they would have considered dreamlike 2-3 years ago…always being encouraged to wait for the market to “get back up to…”, with the end result being that not only have farmers already sacrificed, literally, DOLLARS per bushel for Corn and Soybeans, but far more importantly, they are currently sitting on record UNSOLD Old Crop inventories  at a point in time when I believe both markets are ABSOLUTELY BEGINNING PRICE FREEFALLS THAT COULD END WITH JULY CORN UNDER $4.00 AND JULY SOYBEANS UNDER $10.00 BEFORE THESE TWO CONTRACTS GO OFF THE BOARD…

Let me reiterate: Those inventories represent fairly massive selling into the markets that HAS to be done…and most likely, it’s going to come much  sooner (as in right now) rather than later.

Yes, this may sound extreme, but as I have documented many times during the past year, when grain bull markets do end, they typically DO drop 30-40% within a matter of months…

Another way to put it, and although it actually is just my opinion, I am going to state it here as a fact: WHATEVER THE MARKET, WHETHER IT BE STOCKS, BONDS OR COMMODITIES (AND DEFINITELY IN COMMODITIES), MARKETS ALWAYS GO FURTHER THAN YOU, OR ANYONE, EVER IMAGINEs POSSIBLE… And if you are a farmer, or a speculator who still thinks Corn and Beans are a buy, that is exactly what I think you are about to experience…Prices that continue falling FAR FAR below the worst price levels that anyone in the ag world might think possible.

The bottom line is that both of these markets have been building giant tops/consolidations for over a year now, and with one fairly accurate technical adage being, “Large Consolidations are usually followed by LARGE one directional moves,” I’ll I think that is exactly what we are in the process of seeing now.

I CONTINUE TO RECOMMEND BUYING PUTS IN CORN AND THE SOYBEAN COMPLEX…I urge you to NOT be thinking, “Well, I missed it,” or “There can’t be that much left on the downside, can there?”

Here are put options that I’d recommend here…

Both of these options are fairly short term…but July IS where I think the biggest collapse is about to be…According to the “pros”, this is where the “shortage” and “tight supplies” were supposed to be…which recent declines have obviously negated as making any sense at all, and what we now have is a market, I believe, total devoid of buyers (they have already been scared into covering/buying their needs for the summer), and then farmers, who still have a TON of product from last fall that HAS to be sold…The bottom line is that the July contracts could just drop endlessly into expiration…which, if this is the case, means the leverage is potentially HUGE here…My opinion, of course, and I might be dead, dead wrong but I AM looking for at least $2-$3 in Soybeans and $1.50-$1.75 in Corn from here.

I would also note that both contracts have been more or less DRIFTING lower…but at some point, like the nature of the futures beast is to ACCELERATE LOWER…and all things considered, I think that is where we are now.

Call me if you’re interested…Or even if you disagree…I would love to hear what YOU think…

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: Soybeans, Corn