July 21, 2008
Corn has been dropping faster than I could write about it and presented us with gains that were too large to ignore in so short a time...So we either outright took profits, or locked profits down using call options purchases, today.
In recent days, we have been stepping up our short position in Soybean Oil, expecting it to soon fall very much the same way corn has.
Obviously I don't know what is going to happen...I make educated guesses and combine them with calculated risks...but I do believe the RISK (and I will never de-emphasize it) versus the reward in this trade is about as good as it gets.
Agricultural markets ARE renewable resources and world production can quickly ramp up tremendously, literally from one growing season to the next. Unlike all the arguments for "peak oil", you cannot say the same for products like corn, soybeans or wheat. Farmers, WORLDWIDE, are notorious for planting up to and on their back porch if the price is right...and if $15-$16 soybeans doesn't get them excited, nothing ever will...I may be dead wrong but I see no where for the soybean complex to go but DOWN, and in a big way, especially as we now head towards harvest (i.e. when supply is the greatest).
If you're interested give me a call...the sooner the better, or so I think.
Again, I look at this next chart and only think, "Does the risk versus potential reward get any better than this?". Maybe this is a loser but I will take this bet over and over and over...Just to get back to 45 cents is something like $9000 per futures contract away from here...With futures margin at $2025, or options in the $1500 to $2500 range, I love this idea...
And we are still short Cattle as well...