Subject: CAUTION

Subject: CAUTION


Please be careful – markets still have a lot of bearish news. However, there are some items that suggest selling down here is high risk. Advise buying calls to protect upside.


Corn has bad news coming from Ethanol with short term disruptions. Yet DC may provide subsidies to Ethanol. We are not sure but we see name changes with much smaller long term capacity disruption. China has started buying corn and we should respect the impact this could have. Does ANYONE remember 1973 and 1996?


Beans filled a gap and should have a technical sell off. However beans are not likely to take out lows. Read this note from ADMIS and realize how significant food security is:

  • Kazakhstan, one of the world’s biggest shippers of wheat flour, just banned exports of that source of flour along with others, including carrots, sugar and potatoes.
  • Vietnam’s customs department reportedly ordered a stop to rice exports Tuesday to ensure domestic food security.
  • Serbia has stopped the flow of its sunflower oil and other goods.
  • Russia, the biggest player on the global grain market, is leaving the door open to shipment bans and said it’s assessing the situation weekly.


And be careful about being bearish as MACRO’s seem to be bottoming. For example, a shift of less US Ag export demand to MORE US export demand. Partly due to better trade policy (less Tariff) and the fact that the US is a very reliable supplier. We also see long term economic foundation changes. In other words, we are injecting so much cash into the economy that typically the dollar will go down which will help commodities. JUST THE bailout bill (and not the last they expect to introduce depending on length of economic disruptions) approved yesterday equates to 9% of US GDP. Prior to this US debt-GDP was already at 106% which put us ranked 10th worst.