| IN555 - 5/21/2019 07:43
I'm talking the comparison in spreads of corn vs beans on a YOY comparison. I think the market is already seeing heavy 2020 corn acres which means an opportunity to price them should be taken advantage of.
Now I got you. I was worried about the chart I was gonna look at. Turns out I can't even overlay a spread over another spread in Barchart unless someone knows something I don't???? That makes it a little tougher.........
Last Monday, the NC corn spread was .34 carry, this morniing it's .03. That's a 91% move. In that same time frame, the NC soybean spread has gone from .61 of carry to .46. That's only a 25% move. The market is complacent on soybeans. It should be with a 30% carryout or whatever it is. FC Stone is more bearish than the market FWIW. They are usually pretty good. Soybeans rely heavily on exports, and our dollar is pretty strong right now- more headwinds are not what we need.
So how to capitalize.................. there's a lot of consensus of smart people around here that at the height of euphoria, we need to sell corn for 2019 and 2020 and I'm certainly in that camp as well. You have to remember, I took that .30 on the corn and will put that carry in my pocket so I'm more confident in doing that than some will be. I am extremely biased soybeans to the downside. Buddy told me the other night I'm not bearish beans, I just hate them. He's not wrong. I'm sold in 2019, 2020, and 2021 (2020 and 2021 are smaller percentages). I own some puts too. I think the ratio is going to get wildly out of wack, and I would remind you that you don't have to make all your moves at the same time. I would suggest selling Nov 2020 beans today for 9.11, honestly. I know that's a terrible price but almost a billion bushels of carryout on a crop that we only produce 4 billion bushels of is an anvil around the neck IMO. And we will still grow them next year. And the year after. And the year after........ If acres are 100 M and 80 M next year, with a yield of close to 50, will the soybean market even be concerned? Do the math there...... it won't. My opinion. Take the .46 of carry and just sell the stupid things. I wouldn't worry about covering your carry and waiting because it's next stop $7.... |
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