I am an avid reader of other adviser’s letters. To a T, they are all bullish grains.
Yet, today we make 6month lows in corn, wheat and beans.
I have no idea where the bottom is, but I got away from the bullish cam when Informa mentioned the USA was going to plant 99 million acres of corn and 80 Million acres of beans.
If we get rain this year, we will be up to our eyeballs in grain.
Of course, everyone is looking at the last 3 years. We have not had a significant downside correction of substantial duration. So, farmers and traders have been taught to be only bullish. It makes sense, b/c people love to look in the rear view mirror as they try to out-guess the future.
I personally think there’s one more leg down risk wise.
We have to get the NY Times and CNBC talking about commodity deflation and commenting on record low prices. That, in my estimation, will have to take a situation where we reach close to 1 year lows.
That’s an attention grabber. Looking at the charts, that pencils out to corn below 5.12 and preferably 5.00.
In the beans, that means we have drop below 12.50 and preferably down to 12.10. That’s a one year low. That gets press attention and gets the blood flowing of perma bull farmers thinking about selling some bushels out of storage. When the bins are emptied out, that will be the low. That’s just human nature.
Stay tuned.
Have a great weekend.
CER