August 28, 2024

 Corn and Soybeans

are NOT stopping here?

The long weekend ahead could spur

Heavy Selling tomorrow and Friday…

It’s Wednesday…One potential impact of the upcoming long holiday weekend…with the markets being closed Monday for Labor Day…is that farmers generally cannot sell any Corn or Soybeans between this Friday’s close and Monday night. This is because, without the futures markets being open, the elevators who buy those crops have no means to hedge their purchases, and therefore pretty much remain “closed” as well over the weekend, as, when an elevator, for example, buys 5000 bushels of Corn (the equivalent of 1 futures contract) from a farmer, until he gets that same Corn sold himself…to an exporter perhaps…his risk is that prices will fall, and he therefore will immediately sell 1 futures contract as a hedge to lock in the value of the 5000 bushels he has just bought…And simply stated, if the elevator is unable to protect his profit margin, he is basically going to say, “Wait until Monday night, or Tuesday.”

My point is, with Corn having made new contract lows this week, and Soybeans hovering just 10 cents above new lows as well…and with farmer anxiety still rising (I think) as Dollars continue to evaporate out of their record bin storage, I can easily imagine that cash market selling, in both markets, might pick up sharply tomorrow and Friday…I certainly don’t know that it will, but I DO know that they HAVE BEEN watching money disappear week after week, and my guess is they are NOT getting more comfortable about that fact…and that they WILL, as I keep saying, at some point just start selling in DROVES…all of them together…all of them more or less saying, “Just sell them NOW…at whatever the price!”

I also know that I keep seeing analysts after analyst suggesting that “we’re at, or close to, the bottom,” in both markets…And as I keep repeating: When you get to the actual “bottom”, NONE of those guys will even dream of using the word.

I CONTINUE TO RECOMMEND BEING SHORT CORN AND SOYBEANS…I THINK THE BEAR MARKET IS FAR FROM OVER…AND COULD EASILY BE ACCELERATING LOWER FROM HERE.

You know, I can remember Soybeans being at $7.00-$7.50 and moving lower…when even going under $6.00 seemed impossible…and they ended up at $4.00…And that IS just ONE of many instances where a market “went further than anyone thought possible…or LOGICAL.”

I urge you to NOT be thinking these markets  are “too low to go short,” and remind you of an old adage, “It’s not where you get in, it’s WHEN you get in,” by which I mean, the risk, REALLY, when shorting Soybeans at $9.60 is NO different than shorting them at $12.60…and the WHEN is here and now with the market, to me, all but screaming, “NOT stopping here. GOING LOWER!”

Call me and GET ON…

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: Corn, Soybeans