Market Plus with Chris Robinson

Market to Market | Clip
Apr 19, 2024 | 13 min

Chris Robinson discusses the commodity markets in a special web-only feature.


Paul  Yeager: Welcome into the Friday, April 19, 2024 installment of Market Plus. Chris Robinson with us right now. You said something during the program that almost made me stop you and say, don't be using football terms around me. False start. But I want to start with something. This is not a false start. This is a wild start. You said in your newsletter this week, a line and I need you to explain it. Would you rather have George Soros, whether it's George Soros or George Costanza, you will get bludgeoned, bludgeoned to death in a thin liquid market. What do you mean?

Chris Robinson: Thin, illiquid market. Last night when I was driving out here and obviously what happened in Iran and in Israel started happening, and they always do it in the middle of the night. The overnight markets are terrible. Stay away from the overnight markets, okay? They're not liquid. That means there's not a lot of people playing. So if something bad happens, you get whips and price moves like this because nobody wants to buy it. Nobody wants to sell it because everybody's scared. And what I meant by that is if you know George Soros, you can have all the money in the world if there's nobody there to buy or to sell it, you're not going to do well. And if you even if you're a small person, it makes it even harder because if you're trading futures, people will buy it or sell it and say, okay, I'm going to risk $0.10. Well, beans were whipping around $0.05, $0.10 like this. You could literally put your trade in, put your stop in. And before you look back, you're stopped out of your trade when you get violent trades like that. So that's what I meant by that.

Yeager: What about let's talk that small versus large. We have a question about the funds we'll get to in a minute. What I mean, I use the fact we're about to get heavy into planting. There's already been some already heavy planting. Yeah. You cannot sit there and focus on the markets of things, but we have that itch that there could be some volatility coming back. How does that producer, the producer guard against what could happen with these large funds, these large positions that are out there right now?

Robinson: Well, at this point, we're at where we're at, right? We're a dollar off the highs of November in the wheat were $0.65 off the highs for new crop corn. I think we're a dollar and change maybe a dollar 30 off the highs for soybeans. So we already know what we're sitting at. So if you're worried about rather than worried about trading while you're trying to plant, say, okay, well, you know, I'm going to draw a line in the sand here and I'm not going to worry about it. How do you draw the line in the sand? The only way I know how to do it, either you use sell stops with futures, which I don't like, where you buy yourself or put you say, I don't like doing this, but at least now I don't have to worry about how much lower can it go. And then for the flip side, if we get volatility, cause volatility doesn't always mean it's going to go lower. If we get a 30 or 40 or 50 cent rally, that's when you want to maybe pick up the phone. We had a 98 cent rally off the lows in February in soybeans. Not too many people wanted to do anything. We had the 98 cent rally, everybody’s like that’s it, we're off to the races and then it's gone. So. So protect the bottom line. If we get a 50 cent or a 90 cent rally, take advantage of it.

Yeager: Questions now from the great viewing public of this television show. Let's start on Facebook. Robert wants to know, Chris, what happens if we go from too dry to too wet and we have delayed planting conditions?

Robinson: Well, every year that I can remember, there's usually been some planting delays, some weather delay. I think if you got through, is it 2018 or 2019? I can’t remember what it was, but they were planning into July it was so wet. Eventually the crops going to get in there. And, you know, with these hybrids now, I don't think it has as big as a negative impact on yields as people think it is. So I would say if that's if you're depending on that to sort of save us, I wouldn't put a whole lot of faith in that.

Yeager: So I'm going to guess, Diane in Minnesota's question then is not going to get much of a different answer. But I have a follow up to it. When will the trade consider the 89 year drought cycle that we are in?

Robinson: I mean, I get asked this all the time? I've done a lot of meetings in the past month and a half and a lot of the agronomists out there and a lot of the weather forecasters say this looks a lot like either 2012 or 2020. We're going to get the crop planted in. And then the longer range forecasts seem to be around that May time period. And you go back and look at the charts in 2012 and 2020, we bottomed out. It was the last week of May. So we were talking about seasonals earlier. Everybody's going to be watching the last week of May to see what happens there. The problem is, if you look at 2012, we dropped the dollar 30 off the highs we started in May and we went lower and then we turned around and rallied $3. So if we have a weather issue, it's going to make things very, very volatile. Again, I think you look to take advantage of it if it happens, But I don't think we're going to know until that May cycle comes through as to whether or not this is going to be the drought year.

Yeager: Talk currencies here for a minute. Mitch in Iowa wants to know how much price action is being driven by the real versus dollar exchange rate compared to fundamentals right now.

Robinson: Well, you know, we saw some aggressive selling come out of South America with all the political stuff that was going on down there as well. But the fact remains, if the US dollar rallies all these other currencies, including the real reprice with it. Somebody sent me a chart of that today. The five year move and the real versus the dollar. It has an impact. I'm not going to say it doesn't. I don't think it has as big an impact as a lot of people would like to think it is. I think at this point, it comes down to China, is going to you know, they're going to do what they're going to do in South America. They're going to fold their arms and they're going to see what happens with our crop and wait and see. Because we're at three year lows in corn. We're near nine month lows in soybeans. Yes, they need to buy them, but I don't think they're going to be any hurry, especially if the dollar keeps creeping higher.

Yeager: Your arms aren't crossed. When it comes to the cotton market. You're writing sell orders. Is that going to continue?

Robinson: You know what? I tried desperately. We had a really slow rally. New crop corn, New crop, cotton. Excuse me. Christmas cotton. Back in February. We kind of creeped our way up to 85 and change. It was almost a two year high. And then that's how these markets turn when they turn. And people always talk about the funds. The funds are long with that long cotton. Here we go. China was coming back online. That was going to be kind of a China trade. You saw copper making new highs. So the funds got long cotton and when it didn't pan out, and you can see what happens when they have to move 90,000 contracts, you go from a two year high to a four month low in about two weeks. So cotton, they don't call it the Widowmaker for no reason. It's probably one of the most difficult trades out there. We're probably getting to the point now not to get too far in the woods where we may find some support down here around this 75, 76 cent level in new crop and again, the markets now it's repriced, now it's going on. What's it going to focus on? It's going to focus on what happens with weather just like everybody else.

Yeager: So out of the woods, let's get into the wheat of things. There's another phrase for it. That's actually what the users name is Alex at a poverty grass farm. Should we be selling spring wheat right now or wait for five bucks and lose money?

Robinson: I don't like selling at contract lows. I mean, that's really what you would be doing. And again, not to get too far in the weeds, you can't go back in time. You know, just two, three, four months ago, we were much higher. We've had kind of faulty false start rallies. If you do have to sell it, you need to re own it. But yeah, I'm not going to sit here and tell you that it's fun to sell into new lows.

Yeager: Well, you mentioned during your conversation and that commodity classic, so that's the first week in March. How quick if you sell at that time, you actually are ahead 60 cents, 80 cents on some things. It can go lower. Does that frighten you? We get the questions every once in a while. Like how much longer before these numbers begin with threes?

Robinson: Well, that's the risk especially with spring wheat. Spring wheat is its own animal. Most of the funds play in Chicago and the soft red and the hard red. Spring wheat is a thinner contract. The markets are thinner. The options in spring wheat are not as good as they are in KC. In fact, I hedge a lot of my spring wheat with KC options instead, just because the options and in Minneapolis are not that liquid, I don't know what to tell you. It's hard. I can tell you this, but last summer when we were at eight or $9 above, I tried to get aggressive with guys. That was the time to do stuff. Nobody, I think in his right mind thought that we continue to break as hard as we did and we're just going to have to see. But I can't stress that enough. I talked to a lot of guys that call me and usually if somebody is calling me, it's because things have gone off the rails. They're like, okay, what's my next step? So I would say, if you can hold it, go ahead and hold it and protect it with some sort of downside protection, because, yes, it can go lower. But if you are forced to sell, please re own a portion of it. A lot of it is it's like those big wave riders. You get somebody to pull you out there on a jet ski. If you get on that 100 foot wave, you know, you better know where you're going to go if you're wrong.

Yeager: I want to thank a couple of people that submitted questions that I didn't get to. Jason and Kyle. And Phil, we kind of talked about seasonality. But Chris, I want to close with this. This is something you had said in the green room before we even came on. You said what? And you said it on the show. Watch for the end of May. May is when it’s going to happen. Explain to me again for those of us in the back of the church that might not have heard you the first time, what's happening? What do we need to do in these next eight weeks or six weeks?

Robinson: I would say no matter what, if you don't want to sell at 38, 31 month lows in corn, you give yourself a hedge. Now, will we rally? Can I promise you we're going to rally in May? No, but historically, if you go back and look at the two big markets that we had, those began late May. Right. We come off that last USDA report and then a lot of it is that as we're heading into pollination, that's where it's a critical time period. So if you go back and look and you know, the old expression, history doesn't repeat itself, sometimes it rhymes. So that's going to be a very, very critical role. But for me to sit here and say, don't worry, we're going to bottom out in May and then we'll be alright. No, because we could continue to grind lower. There's always, you know, something out there nobody sees coming. But when you're walking through the graveyard and let's face it, that's what it feels like now when we're on our lows in corn and maybe come up a little bit, you start to look for, well ok, where are some possibilities? So I would say that it's a possibility. Watch that May timeframe. If you go back and look at longer term chart, you can see and in fact, you can go back to every year and look a lot of price volatility comes around the end of May, the beginning of June. We had it last year. We had our run and then that was it. So there's an old friend of mine who I trust and I think a whole lot of he says, every year you always get one, possibly two chances to market your grain at a profitable levels. We're not there right now. Keep your powder dry.

Yeager: That's a gold medal take right there.

Robinson:  It is a gold medal take, isn't it?

Yeager: Yep. All right. Thanks, Chris. Good to see you. Good to see you. That'll do it for Market Plus. Next week, we are going to talk about incentivizing farmers to protect a natural resource. And we'll have the commodity market analysis of Arlan Suderman. Thank you for joining us. Have a great week.

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