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June 10, 2025
THE FINAL MAJOR COLLAPSE IS IMMINENT.
SHORT CORN
HERE…
Back in 1992, as I was preparing to leave Merrill Lynch
Commodities (where I’d been since entering this business in 1980) and start
Croker-Rhyne Co., I spent a solid month doing historical research with the
intent of establishing some cold, hard parameters for identifying what I
considered to be the highest probability trades you ever get…And believe me,
picking tops, like Short Cattle, was not on the list! Nevertheless, I still
see that as a monster potential trade and continue to maintain short
positions there…BUT, what I did “discover” then was the RANGE TRADE
set up outlined below…and 35 years later, irrespective of the commodity
market involved, in my opinion, this is unquestionably the highest
probability opportunity that ever comes around in futures trading.
THE RANGE TRADE
In my mind, there are two primary factors that are
prerequisites for making a substantially profitable trade. The first is
quite obvious. Are you positioning in the direction that the market is
going to move? And secondly, if you are correct, will the anticipated
move be big enough to generate large profits?
These next three statements are from my website’s “Basic
Philosophy” page, https://crokerrhyne.com/default.htm#philosophy1
, and are a another way of stating what I
referenced above:
Futures are inherently volatile...and my perspective is, what
we are really trading is volatility. All the markets will have periods of sideways
action, but all of the markets are frequently trying to move up, or down.
Your objective is to be going with them when they are really going
somewhere.
Select markets which have done nothing for a long time. If
a market has been trading sideways for quite some time, probabilities
"should be" (anything is possible in the futures markets) better
it is soon going to move somewhere. Long sideways
moves are often followed by large directional moves.
Or select markets at price levels at which you can make the
statement, " It will not stay here, and, in
fact, should move a long way from here, one way or the other". As an
example, you might look at a market making the same high (or low) for the
fifth or six time in six months and say, "I don't know which way it's
going, but it's not going to be right here six months from now".
Obviously, it could be, but, again, probabilities "should" favor
it moving away from this old high (or low), and this move could be either
substantially up, or down.
In
other words, futures markets do have long periods where they move sideways,
but sooner or later they DO leave that “range”…and then quite often really
take off with DEFINITVE DIRECTION, and my observation, too many times to
count, has been that the longer they have been consolidating, “doing
nothing,” the bigger and faster they do go as they break out and leave the
range behind…with an added point
being that when it’s to the downside, there is even more of a tendency
to be bigger and faster.
ONE recent example…
Enough theory…Here’s the current trade…and I DO think
it’s big…and that 3 months from now we will have the majority of the
ag world wondering what in the Hell happened to their seemingly UNANIMOUS
opinion that the Corn market “certainly has made a bottom,”…and my
repeated statement that THE MARKETS ALWAYS GO FURTHER THAN THE MASSES EVER
THINK POSSIBLE will again be substantiated.
How could this happen? I haven’t check the stats lately,
but I am pretty sure that farmers are still sitting on near record storage
of Corn from last fall…waiting and waiting and waiting for the big rally
(touted by analysts forever) to sell into…Meanwhile, they have a massive
crop in the ground right now, that, one, will be bringing MORE AND MORE SELLING as it develops, and two, WILL MEAN
THAT FARMERS ALSO HAVE TO SELL LAST
FALL’S CROP TO MAKE ROOM IN THE BINS FOR THE UPCOMING HARVEST. Meanwhile,
with ample worldwide supplies and big crops coming everywhere, I would
think that there is not an end-user anywhere, including China, that is in
ANY hurry to be buying…And this may be an over-simplification, but barring
any weather problems, I DO THINK THIS IS THE FORMULA FOR A CLASSIC “FALLING KNIFE” SORT
OF GRAIN MARKET DECLINE…that gets going from here, and accelerates as more
and more farmers, watching more and more Dollars disappear in the bins, DO
start SELLING…and keep doing so all summer…no matter what the
price.
Maybe I’m wrong…but this IS a script I have seen play
out on innumerable occasions during my 45 years doing this…and I’m pretty
sure some of you have too.
GET SHORT CORN HERE…
I obviously do not know if this is the way the next 2-3
months will play out, and if I am wrong, it could mean losing every dollar
you invest…but I DO see this as being as high probability as it ever
gets…And with this in mind, also believe that owning some of these
out-of-the-money puts (in tandem with the 420 put) also makes sense.
Contact me if you want to do something with this…
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: Corn
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