Warren Buffett is well known for describing the market as a “slot machine” in the short term but a “weighing machine” in the longer term. In the longer term, market fundamentals matter, but in the short term, according to Buffett, it is nothing short of a “crap shoot” — “Spin the wheel take your chance!” – All very “catchy,” but it does nothing to really help you time the market.
As I write this letter the short-term (corn) “slot machine” is punching out new contract lows.
Our American Producers have done it again (so far) as expectations for a large harvest loom and huge ending stocks domestically and globally ensue.
The short-term corn bulls have been decimated as the corn market is presently going where the pain is causing massive liquidation.
While there is certainly despair regarding corn futures, in my mind this is just another exciting commodity opportunity that one should be focusing on.
The “Weighing Machine” or the longer-term fundamentals haven’t changed.
1. If the USDA were to lower their yield estimate by a 2 or 3 bushels an acre and ending stocks are revised lower, declines in ending stocks could eventually diminish quickly. The Pro Farmer crop tour last week did in fact lower yield 2 bushels an acre from this months USDA crop report.
2. Ethanol use continues strong at 22 million bushels a day. Many think that the U.S. will use an additional 200 million bushels of corn for ethanol for August.
3. Demand continues to be robust. As of August 16th export inspections had reached almost 98% of the USDA’s export projection for this marketing year. The five year average is 93.3%
At this rate demand will exceed export projections for the 2016/2017 season.
More importantly:
- The best trader in the world is loading up!
- China imported 3,100 tonnes of corn in April.
- China imported 383,200 tonnes in June.
- And a whopping 913,700 tonnes in July, the fourth highest on record.
Get this …
China now owns 44% of the worlds corn supply.
We should also be cognizant of the fact that spot corn futures bottomed August 31th 2016 at $3.01. Rallied up to $3.79 on February 16th, 2017.
Those of you that follow my Long Term Practical Strategies (LTPS) know that corn futures are in fact in the lower 25% of the long-term trading range and my long term formula is up where long-term accumulation is recommended.
Let me be specific …
It is my contention that corn futures are approaching lows not only for the rest of this year but maybe for the next couple of years.
Those of you that have an interest in corn accumulation should call me personally for a market plan that fits your comfort level at 312-286-9320.
Implementing my Long Term Practical Strategies will insure you will be in the market if chaos returns to our financial markets.
Let me be more specific …
There are four important components regarding my strategies.
1. Positions are established only in the upper or lower 25% of the long term trading range.
2. Positions are established only when my long-term formula turns up or down within that 25% parameter.
3. Positions are held until positions reach the opposite extreme high or low or until my long-term formula changes direction.
4. Correct money management strategies must be implemented. No more than three contracts per $10,000.
Let me be clear. My strategies also incur drawdowns. My contention is if one can establish positions at extremes risk is limited.
My strategies also require one to maintain: Patience, Commitment, Vision, and Discipline.
Those of you that have an interest in additional details should call me personally. Would love to hear from you. 312-286-9320.
In the mean time…Keep holding and keep accumulating with my LTPS. Have a great year trading.
The Price Futures Group’s mission is to provide traders and investors with industry-leading trading solutions, informative market analysis, and cutting-edge technologies which enable efficient decision-making. The Group is available answer marketing questions and meet your investment needs. Find the company online at www.pricegroup.com or call the Chicago office at (888) 264-5665.
