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May 26, 2016

 Wheat broke out of the gate today?

I will be out of the office tomorrow for my elder son’s graduation but wanted to get this out before I left.

July Wheat closed about 16 cents higher today…in a move that left all the genius experts baffled…and asking why?

Several months ago, we had Record Large Fund Shorts in Soybean Meal, positioned directly opposite Record Commercial Longs…with seemingly every analyst on the planet chattering about “overwhelming world supplies”…Then the market started moving higher...while all the experts continued to harp on “abundant supplies”…The resulting rally that they TOTALLY missed can be seen below…which began with a series of nothing but up days and then transformed into an acceleration that is about as straight up as any market can ever go.

I see the situation in the Wheat market as being virtually identical to that of Meal several months ago, excepting for the fact that the imbalance appears to be even more pronounced now, with the Funds holding truly MASSIVE record short positions…while also positioned directly opposite RECORD COMMERCIAL LONGS.

There is nothing that says Wheat has to do the same thing that Meal has done…but I absolutely like the odds of owning Wheat with this is mind…

Here’s a quick glimpse at what Meal has done…and what I suspect might be coming in Wheat…


Again…Here’s the Commitments picture…Those Commercial long positions reflect the fact that they have large orders on the books that they have YET to deliver on…AND THEY STILL HAVE TO BUY THAT WHEAT BEFORE THEY CAN DELIVER IT…


As I have previously noted, with this massive short position apparently having been built UNDER the $5.00 price level, my guess is the bulk of those shorts are probably already at a loss…and believe me, you DON’T just waltz out of a position this large in a matter of days or weeks…With all the buying they have to do, and combined with NEW buying that DOES come in, this market could get very BIG, and very FAST, on the upside…Just like the Meal did, today could just be the beginning of a series of sizeable up days…I WILL NOT BE OUT OF THIS MARKET FOR EVEN A SINGLE DAY…AND I BOUGHT MORE TODAY.


Here’s the long term picture…


Interesting note: With all the BS about China slowing down…and therefore not being a big buyer of commodities (meaning weak commodity prices), I FIND IT INTERESTING THAT CHINA’S WHEAT IMPORTS FOR THE FIRST FOUR MONTHS OF 2016 WERE UP 44% OVER A YEAR AGO…AND EVEN SO…THE COMMERCIALS ARE STILL VERY, VERY, VERY LONG THIS MARKET.

I will be out of pocket (in the air) between 8:00 AM and noon tomorrow. If you want to reach me, leave a message on my cell (770-366-3070) and I’ll get back to you asap…Or you can also call Rick Sitten or Willie Adams at Benchmark (770-454-1880) who will be covering for me while I am unavailable.


Get with it guys…The markets have heated up…





All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has financial interest in the following derivative products mentioned within: Wheat


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