July 10, 2023

Row Crops Whipsaw

During the past month, Corn, Soybeans and Wheat have been whipping back and forth with more volatility than we’ve seen in years…with $1.00-$2.00 reversals taking place in almost a matter of days…

The end result, I believe, has been something of a death knell of sorts for Corn…while Soybeans appear to be lifting off towards potentially MUCH higher levels…maybe to even record all time prices.

In my last newsletter, when I reversed my long held short opinion in Corn and Soybeans, I offered that weather could take both markets explosively higher…BUT…that if the rallies in either of them “failed”, it would be somewhat obvious, and I would then be returning to the short side and looking for their respective bear markets to continue to sharply lower prices…which has, I firmly believe, become the negative case for Corn…and for Soybeans, exactly the bullish opposite.

I therefore remain bullish and long the Soybean market…And am once again Short Corn (ignoring Wheat for the time being), looking for a move, a least, under the $4.00 mark.

Here are my perspectives for each of them…And whatever I think, I always remind myself that what this is really about is the math…and volatility…and what happens to options values as the market DOES make the large percentage moves that ARE the norm in Futures.

The BULLISH case…

 Or…that it IS going up or down in a big way…NOT sideways…

And BEARISH CORN…Do NOT think, “Oh, it already has sold off,” or “Corn is cheap here.”

Obviously, you can buy just the calls or the puts in either of these markets, but considering the circumstances and the weather volatility…and the undeniably attractive math on both of these charts…THIS IS A LETTER PERFECT SET UP FOR USING THE BOTH SIDES APPROACH…Of course anything can happen, but I think the odds of “going” nowhere from here are almost nil.

Furthermore…I DO think that whatever Soybeans do on the upside from here…and it could be a giant move…at some point they will again become every bit of the short that I believe is now occurring in Corn…And as it has been in Corn, if Soybeans do fail here, I think it will be obvious and I WILL go right back to the Short side, looking for under $11.00…For right now, however, I am absolutely long Soybeans here (using both sides) and know that if weather does remain a factor, there’s no telling how high they could go.

MAJOR opportunities in both markets here I think…As always I might be wrong, and if I am, you could easily lose every dollar your spend.

Let’s go guys. Using the both sides thing, volatility is your friend…and I think that’s exactly what we have now for the next few months.

Call me if you want to know more…

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