It was another down week, even for bitcoin. The darling of the wannabe currency gurus was down 13,440, or nearly 30%, in a week. Lumber, the inflation indicator, was volatile with successive limit moves up and down and up again $113 per thousand board feet. Closer to home, corn was higher and soybeans were down hard along with wheat, meal, canola and soy oil. All commodities were flashing a sell signal a week or so ago, which we did, with further confirmation this week.
As mentioned in previous interviews, there has been good opportunities to sell cash and avoid the futures exposure. However, the need to become informed and comfortable using hedging tools was even better, or helped, in addition to cash sales. Selling out-of-the-money calls for a premium, somewhere around 50¢, was better than selling cash and re-owning upside protection at such lofty levels. Elevators like it because they buy your grain and then sell you calls for the right to re-own the same grain you sold — and they laugh all the way to the bank because you paid them an outrageous premium for doing so.
The long-term weekly corn chart keeps me awake at night because interesting things have happened in the past three weeks. If you have questions, call (707) 365-0601 or send me an email at jerry@gulkegroup.com.
Check the latest market prices in AgWeb’s Commodity Markets Center.
Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.
