June 29, 2020
Part of this game is being wrong…and losing…and with 40 years in this crazy ass business, I have seen a lot of it…And to say I have been here before, wherein I had sold a bunch of people on a market…or group of markets…and then watched the trade become a TOTAL BUST would be nothing less than a massive understatement.
I have been loudly recommending buying the four row crops (Corn, Cotton, Soybeans and Wheat) since early this year…with a special emphasis on Soybean Meal…with a specific focus having been on the July options in all four markets…And as of this past Friday, ALL of those options had expired worthless (except Cotton, which has had about a 15 cent rally)…and I sit here on this Monday with pretty much 75% of you now totally out of the market…and with those who are left with anything having only minor positions compared to what they were holding 2-3 months ago…myself included…the result being that I find myself psychologically and financially debilitated…wanting just to crawl under a rock…wanting no part of putting my money and reputation on the line…BUT…KNOWING I should be right back in the market, with new money and more time.
And so here I am, after a weekend of kicking myself, bemoaning my losses, and asking myself if I have been stupid…And after forcing myself to take a new hard OBJECTIVE look at the markets…I concluded the following: DO IT AGAIN. BUY OPTIONS, ON ONE SIDE, IN ALL FOUR MARKETS…and if I could, do so and then not even LOOK at anything for the next 60-90 days…that I firmly do believe that all of these markets are imminently PRIMED to go…when generally speaking, nobody, and I mean nobody, is even remotely thinking, “I need to buy this stuff!”
Like I said, I HAVE been here before… I do “KNOW” that right here, right NOW, in the face of having crashed and burned, IS the time to make my bet again…and to do everything I can to get everybody to do the same.
From here, I’m not thinking. I’m not analyzing. I’m not “waiting to see what happens.” I’M PUTTING MORE BUCKS ON THE TABLE AND JUST BUYING.
Hopefully some of you will do the same…
Here are the positions I am recommending here…and immediately so.
Give me a call if you want to get on with me…
TO OWN ALL 4 MARKETS WOULD COST ABOUT $3350…Do the math…If just one of them works only MODERATELY, and the other three just die…you would probably still come out ahead…If 2, 3 or all 4 work to some degree, which is what I DO think is about to happen, you would obviously so very well…Again, just o the math…And obviously, if all four go no where to lower, you could lose everything you invest.
I might be dead wrong but I think this is it…FINALLY…And I will personally NOT be out of these trades for the next few months. This is not wishful thinking. All of these markets are essentially BELOW their costs of production…and I say that demand for NONE of them is going to do anything but go up from here. I don’t give a damn how “oversupplied” we supposedly are. Just about EVERY commodity bottom I have seen during the past 40 years had “record supplies” and “no upside potential” when they turned.
Aside from the simple possibility of weather problems that may occur between now and harvest, in today’s WORLDWIDE crisis, it does occur to me that one totally unforeseen development might be to see countries, worried about supply side disruptions that could lead to food availability problems…like China as a big example…already be quietly adopting a “We-need-to-stockpile-for-the-future attitude” towards feed grains and food. I’d almost say, how could some governments NOT be thinking along those lines when there are more unknowns and uncertainties today than any official on the planet has ever seen…or dealt with.
But to reiterate, one thing I DON’T expect is less demand for feed and food…quite the contrary. They are both about as basic to our NEEDS as it gets.
Hope you’ll go with me…And hope you won’t hesitate…For what it’s worth, we have a fairly big USDA report out at noon EST that could easily change all of the option prices recommended here…
Thanks…Give me a call.
All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Corn, Cotton, Soybeans, Wheat