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Tidbits, Cordoba Frost, Fuel Recommendations, Alan Bonifas, Rain Days Update 2/19/23

Yesterday morning: frost in Cordoba, Argentina. That is corn in the background. No information of how widespread or how serious the damage is.

 

We are very pleased to announce Alan Bonifas has agreed to join Wright on the Market to provide us with his variation of technical analysis for long term market outlook.

Do not fret; The Tech Guy is here to stay. His technical education and projections have been very well received by our clients plus he has the time to get deeply involved in explaining technical analysis. Alan has a wife and three kids, farms, and a grain bin building business in southeast Nebraska, near Roseland.

Here is why we are excited to have Alan join us.

Early December 2018:

Alan told Roger (directly, not third party) corn and beans would make the 2019 low on May 10th 2019. Pretty bold prediction given the seasonal trend for corn and beans is strongly higher from February to June.

The low was May 13th, a Monday: July corn $3.43, July beans $7.91.

Late November 2019:

Alan told Roger corn and beans would make a major low the last half of April 2020 followed by a historic rally into September. Another counter-seasonal prediction for corn and beans for spring and into the harvest!

The low for both corn and beans was made April 21st:

A 14 year low on corn with the May contract at $3.00; the 2020 high price for corn futures was made December 31st at $4.85¾.

Spot month May soybean low was $8.08¼; the high for the year was made December 31st at $13.21½.

Roger was unable to persuade Alan to join Wright on the Market in 2021; Alan had earned our business, but he was not ready to commit the time and Roger did not think it was fair to ask Alan’s outlook for 2021.

Once again Roger recruited Alan in the spring of 2022 and Alan said he would join our team when he got some other things worked out.


Alan did tell Roger on 29 March 2022: the 2022 high in corn and beans would be May 9th.

July 2022 corn high was April 29th, 2022 at $8.24½ (ten days sooner than Alan’s predicted). December 2022 corn high was May 16th at $7.66¼ (seven days later than Alan’s predicted).

July 2022 soybean high was June 9, 2022 at $17.84 (a month later than Alan predicted). The November 2022 bean high was June 9, 2022 at $15.84¾.

All of you have been concerned about fuel prices. Roger has consistently said wait from a fundamental perspective in that the best cure for high prices is high prices. Roger has said for six months not to forward price fuel. It just so happened that on Thursday (16 February 2023), Roger told some clients to price two years’ worth of natural gas for their irrigation pumps.

The very next day (this past Friday), Alan Bonifas called Roger and said Friday (February 17) or Monday (tomorrow) will be the low for energy prices for two to three years.

Nothing is 100% in this business and past performance is no guarantee of future results. But you are paying us to provide you with the best market education and advice we possibly can. In the 40+ years Roger has been in this business, for technical analysis and the ability to communicate that complicated information so us farmer-types know what the technician predicts, there is none better than The Tech Guy and Alan Bonifas.


 

Now, back to business.

Roger’s assessment: Given the current prices of all the various petroleum products, the most likely to have prices increase substantially in order probability:

  1. Natural gas

  2. Crude oil

  3. Gasoline

  4. Diesel fuel

Natural gas users should check with their supplier to see if a reasonable price can be locked-in for the next three years and/or buy natural gas call options or futures.

Roger thinks diesel fuel still has some downside potential because China is buying far more cheap Russian crude oil than it needs, refining it to export diesel and other refined products. If you can lock-in a cash price with which you are comfortable, do it. If not, buy crude oil call options or futures or heating oil futures or calls.

Crude oil options are 1,000 barrels; crude oil futures are 100 barrels, 500 barrels and 1,000 barrels. If you choose to buy calls, take note:

At-the-money crude oil calls are:

  • April $76.50 call option $3,030

  • May $76.50 call option $4,640

  • June $76.50 call option $5,880

  • July $76.50 call option $6,710

We do not recommend buying later than April options because they are more expensive and crude is not going to go up everyday. Crude oil price will rally, and back-fill; rally and back-fill, etc. April crude options expire March 16th.

To hedge your diesel or gasoline, we recommend buying an at-the-money April crude oil call option ($76.50 strike price) for $3,010. When you can make $2,100 to $2,600 of profit, sell it and place an open order buy a May call option for $3,010 at a strike price $2 lower than the May futures price the day you sell April call. Repeat until September when the season trend peaks. We will do our best to guide you. Start by placing the order to get an April $76.50 call option bought at $3,030. Figure one barrel of crude will produce 20 gallons of diesel. A call option = 20,000 gallons of diesel. We are trying to make 10¢ per gallon 12 to 15 times by September as cash diesel price decline another 40 to 80¢.


 

Rain Days Update


The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/

Explanation of Rain Days


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