September 13, 2022

First thing…I will leaving Friday morning for a family camping and fly fishing “expedition,” beginning with Yellowstone, then NW Montana, the Canadian Rockies, and finally Oregon…and will be out of the office until Wednesday, October 5^th. There is not a position I own, or that any of you have, that I would touch between now and then…that if/when the Corn and Soybean markets do start to fall, there is no sized downside move that would have me thinking, “Get out now,” before my return in about 3 weeks…However, if any of you do have something you want to do in the markets, the ADM Order Desk in Chicago can take care of it. You simply need to say you are a client of Bill Rhyne, have your account number at hand, and know what you want to do, and they can help you with the order. The phone number for the ADM Order Desk is 312-242-7352. If you have any problems during the call, just ask for Frank (Niekrasz). He runs the desk and is aware of my being away…Although I will often be a bit “deep in the woods” and perhaps without phone service, if you do need to contact me, absolutely feel free to text or call my cell, 770-366-3070, and I will get back to you as soon as possible…but also be aware that I purposely will NOT be following the markets. As I said however, my opinion, for real, is to get short, stay short, and let the markets just go.

 The Last Rally in Corn and Soybeans?

Yesterday’s USDA report produced ANOTHER RALLY in both Corn and Soybeans, thereby certainly doing nothing to dispel the ongoing bullishness I hear EVERYWHERE regarding these two crops, but in the end, they, along with any number of other commodities appear to have topped out many months ago…And somewhere in here, I continue to believe that any given down day will be the beginning of a massive slide lower in Corn and Soy…in the same vein that has seen Crude Oil recently drop $35-40, Gasoline drop $1.90, Copper drop $1.30, Wheat drop $5.00, and Cotton drop 40 cents…all of which represent VERY large percentage declines. And, on top of that, Gold, the supposed inflation hedge, and often something of a canary-in-the-mine predictor for the grains, has dropped almost $400 an ounce since March, and is, in fact, poised to make new 3 YEAR LOWS…The point is, I think the idea that Corn and Soybeans are somehow immune to the sharp declines that have taken place everywhere else is absurd…And as painful as this sideways action has been while sitting here owning puts, I DO THINK BEING SHORT THESE TWO MARKETS IS ABOUT TO PAY OFF IN A BIG WAY…THAT BOTH OF THEM WILL, LIKE ALL OF THOSE OTHER MARKETS, ABSOLUTELY GO IN THE TANK…Obviously I don’t know that this is about to finally happen, and if it does not, it will could easily mean losing 100% of what you put on the table, but that IS what I am still personally doing.

Here’s what has been happening on the downside, to varying degrees, pretty across the board in commodities…
 

And so…What will Corn and Soybeans do? I’ve been on this for months…Both markets definitively (I believe) topped out months ago, yet neither has broken down decisively. However, my “old hack” experience reminds me that WHEN markets move is probably the toughest call there is in this business, but that the longer they “delay,” in this case, in cracking down, the bigger and faster they tend to do so…And again, as we head into harvest, and this story of “tight supplies” gets older and older, I remain convinced that something like we have see in ALL of those other markets IS precisely what we’re about to see in Corn and Soybeans. I still view ANY down day, however quiet and insignificant, as potentially the first day of a MAJOR, relatively non-stop decline that WILL match the size of all those charts above. I WILL NOT BE OUT OF THIS TRADE…and I suggest, painful as it might be, that your perspective be the same.

Here’s the long term picture…

 And here are the options I like here…right here, right now.

For decades, my observation has been that 99% of analysts NEVER see the big one coming…And that is where I think we are now with these two markets…I’m here until Thursday. Give me a call if you want to do anything with this. My advice is buy puts in both…Then basically forget them until year end.

And this is a new market recommendation

Why interest rates will go no higher…

BUY TREASURY BONDS

One year ago, when I was making my call for substantially higher interest rates, figuratively speaking, maybe 99 out of 100 analysts were NOT of that opinion…INCLUDING anyone at the Fed…And for many months thereafter, as inflation was surging and rates were going up in the Futures markets, the Fed steadfastly refused to budge from their opinion that inflation was “transitory,” meaning that any aggressive move to raise rates was unnecessary…until this summer when they finally owned up to having totally misread the situation, resulting in them making their first 3/4% raise in June when the CPI inflation rate hit 9%...followed by another 3/4% in July accompanied by lots of tough talk from Chairman Powell…And they will undoubtedly be going another 3/4% next week as the idea of “persistent inflation” is rampant in the media.

HOWEVER, my own opinion is that there is not any major category of consumption out there that will become more expensive during the next 6-9 months. To the contrary, whether it’s rent, or housing, or vehicles, or big ticket items, or FOOD (the latest big headline topic) I think prices for everything will be either falling or at most, be dead sideways going forward from here. And as regards inflation, just to simplify, if you have any item that, let’s six months from now is NOT higher in price, you are then talking ZERO PERCENT INFLATION…and if that item should get cheaper…you would then be seeing NEGATIVE INFLATION, either of which will blow the idea of rates moving any higher from here right off the Fed’s road map…And all of those millions of bets that are NOW out there (NOT a year ago) positioned for higher rates, will find themselves losing money.

It’s been a long time since I’ve seen a Treasury Bond bottom, but those of you who have known my interest rate opinion through the last 30-40 years will perhaps believe I know what I’m talking about here…AND I THINK THE TREASURY BOND MARKET IS ABSOLUTELY A SCREAMING BUY…Interest Rates HAVE gone up…and now they are about to fall as the befuddled Fed (so endlessly wrong for the past year) will be thoroughly surprised by how fast inflation almost disappears in the coming months, meaning that, in all likelihood, next week’s rate raise could easily be their last.

Keeping this very brief…

Pretty sure I will get no takers here…but I know some of you “old guard” guys will get this…Again, I’m here until Thursday.

Thanks for reading. Hope to hear from you…Otherwise see you in October.

And oh yeah…BUY THE STOCK MARKET…N-0-W…You’d have to be from Mars to not have heard all of the talking heads (NONE of whom were selling a year ago) now screaming, “Recession!” and “Higher Rates!” and “Inflation!” If I had time I’d show you a collected collage of more brokerage house generated BEARISH HEADLINES than I can recall having seen in YEARS.

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, Treasury Bonds