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December 18, 2024
CORN, SOYBEANS AND WHEAT HAVE BEEN IN BEAR MARKETS FOR 2
½ YEARS NOW…but thanks to an army of supposedly professional, endlessly (and
wrongly) BULLISH agricultural analysts, as prices have steadily declined,
America’s farmers have been influenced to hold, and hold and hold their crops,
waiting for the “bull market to resume” before they sell…And it still has
NOT…with the bottom line being that, even with prices dropping below the cost
of production, and having watched mountains of dollars disappear in the grain
bins, they are STILL sitting on massive supplies of Corn and Soybeans, that
sooner or later, THEY HAVE TO SELL.
Having been a broker for over 4 decades, it’s definitely an
understatement, but I’m gonna say that I have an
above average understanding of human behavior as it relates to dealing with
losing trades…and after watching both Corn and Soybeans drop by roughly 50%, a
BIG “losing trade” exactly defines where farmers now are in these two crops…And
believe me, I KNOW that at some point, fear of “losing more” eventually
overwhelms any last hopes of a rally, and “JUST GET ME OUT!” becomes the
mentality of, not just a few people, but of the masses, with nationwide selling
leading to the truly straight down price gutting move that I have been looking
for...
And with Soybeans making new lows AGAIN today…and NOBODY
knowing what Herr Trump will be doing vis a vis tariffs come January…my guess
is that, right now, there are an increasing number of farmers thinking, “I have
to sell SOME!”, which is maybe all that it takes to set the wheels in motion
towards EVERYBODY doing the same thing…while buyers sit on their hands…and the next thing you know, Soybeans and Corn make their
last, and most brutal, “falling knife” crash lower to prices nobody ever
thought possible.
And maybe I’m dead wrong but that IS a scenario that I have
seen more times than I can count…
I REMAIN EXTREMELY BEARISH BOTH CORN AND SOYBEANS AND STILL
RECOMMEND BEING SHORT BOTH OF THEM…I’d also note that these ARE the FUTURES
MARKETS…meaning they DO anticipate the future, which definitely raises the
possibility that by the
time we get to January 20th, and whatever damaging tariffs news
we’re getting hits the headlines, the markets may already have reflected the
negative price impacts of a trade war…IN OTHER WORDS, BY INAUGURATION DAY,
PRICES COULD ALREADY BE A LOT LOWER.
This is slightly more aggressive…but absolutely a viable
approach…
I cannot imagine anything
except that farmers ARE now beginning to freak out…and that the panic
liquidation scenario that I have been anticipating IS now beginning to happen.
Call me if you want to 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.
FUTURES
TRADING IS NOT FOR EVERYONE. THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL.
THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT
OF YOUR FINANCIAL CONDITION. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE
RESULTS. THERE IS NO GUARANTEE YOUR TRADING EXPERIENCE WILL BE SIMILAR TO PAST
PERFORMANCE.
The author of this piece currently trades for his own account
and has a financial interest in the following derivative products mentioned
within: Soybeans, Corn