November 17, 2022

Part of this game is waiting…and waiting…and waiting. And sometimes, as a market goes endlessly sidesways, it leads you to think, “I am wrong,” when you are NOT. Believe me…This LENGTHY top in Corn and Soybeans has worn me out but I have not survived in this business for 4 decades by giving up on an idea that I am 150% sure about just because it has been losing money. And being “150% sure” does not mean I will be right…but it does mean that I STAY on this trade, SHORT CORN AND SOYBEANS, because I think it has MONSTER potential.

Year end is coming. Farmers are bullishly sitting on mountains of Corn and Soybeans that they supposedly “won’t sell unless prices go higher” but I have seen this scenario too many times to count…And yes, they WILL sell, but they WILL be selling in fear as they watch bins full of product suddenly becoming worth 10% less…then 15%...then 20%...and so on…as all of the bullish media they have ALL been listening to suddenly gets proven wrong…and  the farming masses end up selling their product, again, in FEAR, deep in the hole from here. If I’ve seen it a 100 times, I’ve seen it a 1000…and so have you…where some super bullish story ends up being totally just the dead opposite of what happens…

In that vein, here are just a FEW recent examples of exactly that…If you follow the commodity markets/news at all, I think the observations made below will make sense…

Six months ago, do you remember all the hurrah about Natural Gas prices? How they were going through the roof and staying that way, a situation that was supposedly amplified by Russia cutting of Nat Gas to Europe due to Ukraine War Sanctions? Also pertinent to the story is how Natural Gas prices were jacking up fertilizer prices? DO remember how big, loud and ongoing all that bullish talk was…and note what has happened…

And this? SAME unanimously bullish story…

And this? Gas prices going to the moon was THE headline story back in June…

And this…

 And this? THE inflation hedge? When every economist and analyst on Wall Street was starting to scream about inflation?

Ditto…

And this…

AND this…As I keep noting, THE commodity most bullishly (supposedly) affected by the War…

 And one more time, this one, Cotton…which, all of you farmers, KNOW…couldn’t have had a more bullish story 4-5 months ago…

 And let’s not forget this one…

You are kidding yourself if you think Corn and the Soybean Complex are “immune” to what has happened everywhere else…It’s just a matter of when…and I absolutely think it IS dead ahead…I REMAIN AGGRESSIVELY SHORT THESE MARKETS…with a special focus on Soybean Oil.

 First…The long term looks…Do note how all of these markets do ROUTINELY all but collapse away from their highs…

 Here are the put options I like here…And I do recommend treating these as a “unit,” either owning all three, or, at a minimum, something in Corn and something in Soy.

And I DO think that this latest slide IS THE BEGINNING OF THE COLLAPSE…which, as always, starts with no particular news to suggest the decline is fully underway…You DON’T get some big announcement that says, “The move down is starting today!”

If we see 60, I think we’ll see under 50…Just how this stuff works…

If you follow these markets at all, you KNOW there is no great opinion out there to “GET SHORT.” So, if you think I’m making sense, I would urge you to make the move BEFORE any of this starts making headlines…

Been beat up…watching these two markets go sideways forever…but FIRED UP right now…Farmers ARE notoriously sitting on TONS of this stuff…that DOES have to be sold…AND the whole continent of SOUTH AMERICA IS GEARING UP to likely bring massive crops to market beginning in February…by when I’d say that ANY ideas of a “shortage” will have totally disappeared…AND…one more time, all I have heard, ALL year, is “BE LONG,” and sense that everybody STILL is…

As always, I might be dead, dead wrong, which can absolutely mean losing money, but I am personally going aggressively short  here…especially when I pretty much “know” that the whole ag world is on the opposite side of this…And to be sure, I AM truly looking for the lowest price targets I’ve drawn on the charts.

We’ll see. Hope you’ll get on board with me. I swear…the “wait” is over.

Thanks,

Bill

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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, Soybean Oil, Soybeans