Yeager: This is the Friday, February 17, 2023 version of Market Plus.

Chris Robinson with us.

If you listen to the M-to-M podcast with Chris Robinson several years ago we got into your background.

You were a college football player.

Robinson: Yes, sir.

Yeager: Did you hold on every single play at center?

Robinson: Every single play.

In fact, once I went from high school to college, the first thing I did is okay, this is how we're going to hold and not get caught and it was basically if you stayed in here you were fine.

The moment your hand came outside it was a flag.

And so yes -- Yeager: Confirmation there's holding on every play.

Robinson: Every play.

Get that out of the way.

Yeager: Cotton market, this is one you wrote about this week.

You said, I cannot bang my pots and pans any longer.

Are my pots and pans broken?

Why did you say that?

Robinson: Well, I was looking at new crop, not old crop, but it's been a very technical market.

We had a really nasty selloff and then a rebound.

The last selloff in new crop corn we dropped I think it was 25 cents from 90 to 65, don't quote me, 95 to 60.

That was the stone cold low.

And we rallied $17.

So that was a big rally.

And it was also 62% retracement, which is a technical thing that attracts a lot of attention out there.

Sometimes it works, sometimes it doesn't.

We sat there for a month and I'm like hey, this is a gift, it's a gift.

You're not capping the top, but sell some bushels, buy some puts and then low and behold this week here we finally fell out of bed.

They tried, tried, tried, tried.

It's like the wolf blowing down the house, it's like huff and puff, they finally blew it down.

Now I'm not saying we can't go above that, I think it was 85 level -- Yeager: Yeah, we closed today at 80.

Robinson: Yeah, so 85 forever and then now what I don't want to see is nobody does anything until we go back down to 62 or 60 something strange happens because a lot of that is depending on Chinese demand.

We talked a little bit about this earlier because everybody thought that once the Lunar New Year was over and they reopened, China is the biggest end user and producer, they really dominate that market and I think that's another thing, people got ahead of themselves, they go okay here comes China, China hasn't showed up and it was like the lifeguard blew the whistle this week.

And cotton is a dangerous trade anyhow.

So when they give you that opportunity to set a good hedge it was there.

And we'll get more opportunities the rest of the year.

Yeager: But it applies to all the commodities really, some of that same knowledge.

Okay, so this one let's start with Scott in Illinois via Twitter.

If a producer now can see profits at these price levels and buys 85% of crop insurance, why would he not price the other 15% now even if it's with puts to keep the upside open?

Is it because of bragging rights at the coffee shop?

Robinson: Well, yes, at the end of the day two things drive the market, fear and greed.

And last year we all watched January, February, March wheat took off and anybody who sold too early regretted it and then the same thing, that same fear let you sit through a $2 break when everybody thought well here comes the weather market, here comes the weather market.

So I always say this in my program and when I work with my clients, nothing beats a good cash sale.

At the end of the day that's what we're trying to do, get you positioned to make a good cash sale.

And the put is the perfect way to do it.

But people don't want to spend the money on the put.

It's like you want to try and time it, you can't have your cake and eat it too.

The nice thing is now they've got these weekly options, monthly options, shorter-dated options.

Back 10, 12 years ago you used to have to go up and buy 300 days worth of time.

You don't have to do that now.

So the market is giving you a chance to protect when you want to.

But again, the whole game as far as I'm concerned is getting you to make good cash sales.

And if you're profitable at these levels lock it in.

Yeager: Is fear and greed driving us on why old crop corn and beans have been kind of stuck, because people are hesitant?

Matt Bennett, I told you between shows, he said last week he found out nobody, he was surprised how many people still had grain in the bin.

You were not surprised at that statement.

Why are we not selling?

Robinson: Farmers always want to hold onto their corn and most of them get rid of their beans.

They may have a few beans left.

But a lot of guys are sitting on a lot of corn, trust me, which is great because we're kind of wait and see.

Are we going to get a demand market?

Are we going to get a weather issue?

But what I would say is this, if you've got the grain you need to keep a floor under it just in case we break out of this range.

And old crop corn is, I call it the triangle of shame, for three months we can't get above about $6.90, we can't get below $6.60.

Sooner or later, I don't know when it's going to happen, it's going to break out.

I've got clients that are end users that we've got calls on in case we go north of $7.

But I've got puts on for anybody that is worried about a big drop in price.

I'm talking about 30, 40 cents, some correction, somebody says something, something changes -- Yeager: Not a black swan event, you're just saying a simple thing?

Robinson: Yeah, something simple, but these markets -- that's one thing I learned on the floor with guys that taught me -- corn is a grinding market.

It grinds, grinds, grinds and then it moves where soybeans are more like crazy, crazy, crazy.

But corn generally is a grinding, grinding market and then when it goes, it goes.

So, rather than fall over yourself saying I know where the highs are going to be and lows are going to be, take what they're giving you, keep your protection cheap, as cheap as you can and the name of the game is to try and make good cash sales.

But yeah, if you think there's a possibility that we get $8 corn again, which everybody wants to see, and I talked to one of my guys the other day and I said, if it gets back to $8 you're not going to sell it anyhow -- Yeager: Because it could get to $9.

Robinson: Right.

So that is when a put can help you.

And so yeah, I'm a glass half full person.

It's nice to be where we're sitting at right now.

What I don't want to see is a trip back down to the July lows.

Yeager: You talk about used to just be ag was in commodities, now as Kurt in Iowa reminds us, with the stock market working lower, will speculators pull out of commodities and find value in stocks?

Robinson: I'm more concerned -- the stock market keeps hanging in there.

We're only about 7% or 8% off our all-time highs in the Dow, maybe a little bit worse in the S&P and so you can fall over yourself about that.

Here's what I'll say about the stock market, Peter Lynch managed money for a long, long time, he averaged 30% over his year but if you look at the people that had money with him they only made 7% because they kept getting in and getting out and getting in and getting out.

So the stock market I think is a longer term issue.

You will see money move if they think there's a story.

That was one of the reasons we had such a good bull move off of the lows of the pandemic is everybody that wanted to own commodities and looking back now they're probably going to study that in econ classes like wow, that was a great opportunity when everbyody was scared to catch that move.

This correction that we had after about the summertime, a lot of that was money coming out, money coming out because they were like okay, the recession is coming, we've all been told for six months the recession is going to come.

But at the end of the day, money will chase the next big idea.

If we get a weather market it's one click of the button and they're back long.

I'm really anxious to see what the committment of traders says when they give it back to us because that is something to look at every week.

It's nobody's opinion, it's the facts, you can see who has bet long and who has bet short.

Yeager: Okay, so if we don't have the committment of traders, maybe we have another commodity that will give us an indication of what's going on.

You can see this one coming from a mile away.

Edwin in Alberta wants to know, Chris, what does oats know?

Robinson: Gentlemen don't trade oats.

Yeager: Oh that's the second part of it we didn't type up, sorry.

Robinson: Yeah, gentlemen don't trade oats.

That's just an old whatever it is -- oats are a thinly traded market that can move on not a whole lot of volume.

We did jump about 15 cents last night this being Friday.

I'm not sure what the volume was.

There's obviously an issue there.

Some think that the relationship between corn and oats is out of whack.

Generally people will say that sometimes oats will lead us.

I'm saying we're back to old crop corn.

We've been in the triangle of shame so if it takes oats to get us to break out so we can get above $6.90 I'm all for it.

My concern is that if corn drops below $6.60 because the funds, the last time we knew about it they're bet long corn, they're bet long beans and they're short wheat.

So if that was to flip -- and most farmers are more concerned about corn and beans.

I know guys are concerned with wheat.

But those are the two things.

And as long as they're bet with the farmer that s a positive.

Yeager: You mentioned little things that could happen.

What about big things that could happen, the black swan event?

Or what happens to the grain markets if Ukraine and Russia war is over, is what William asked us on Facebook this week?

Robinson: Well, I hope he's right, I hope that war gets over soon because it has been -- it's very hard to decide what is going to happen on a binary event, heads I win, tails I lose or maybe I do, maybe I don't.

We've seen a lot of people, a couple of things, markets have really kind of shook off all of that.

Look at natural gas today.

You would have thought that natural gas would have been through the roof because they weren't selling it to Europe anymore.

We're coming up on one year lows in natural gas, all that stuff.

So the market is telling you it doesn't care about that situation when it comes to natural gas right now.

And also it really hasn't affected the grain prices as much as everybody had thought, that this is going to be terrible, we're going to have a shortage.

We haven't had that.

So a lot of the best laid plans -- I would think if that war was to get solved you'd probably see prices drop just as a knee jerk because people are like okay, more supply is coming.

Yeager: Well, you said during the show if I caught what I think you were saying is, oh yeah, they've made all those targets and quotas and they've filled all those sales.

So things have moved, the mechanism is there, just not maybe as free as it once was.

Last thing is an economic thing, large question to close our Plus here real quick.

Bradley in Nebraska, real quick, attending UNL in the early 1990s Dr. James Kendrick taught about the John Deere low, a theory that prices in March are depressed because of farmers selling grain to make land rent and farm equipment payments.

Is the John Deere low still relevant?

Robinson: I don't know if it's as relevant with interest rates being as low as they have for the past few years.

I think John Deere also has its own financing program.

I don't think that's as big as an issue as it is now.

I would say this, if those payments are due, those are coming up.

I think I'm more concerned about cash rent payments and also input payments.

But yeah, I could say that.

And again, if you see a dip in prices you can always say yeah, that's because farmers finally decided to sell.

Farmers sure didn't want to sell at the end of the year.

Why?

Because they didn't want to pay taxes on it, let's wait.

That was a great opportunity end of the year and it didn't last very long in the beginning of the year.

So I would agree with that on principle.

But at the end of the day, with interest rates still relatively low I don't know if it's that big of an impact.

Yeager: Holding number 58, Chris Robinson.

Robinson: Number 50.

Yeager: 50, sorry, I knew he was a center, it had to be a 5.

Chris Robinson, thank you, appreciate your time.

Robinson: Thank you, sir.

Yeager: All right, that will do it.

Next week we are going to look at high school students taking a class that helps return dividends back to their classroom.

And Ted Seifried is going to be with us.

We'll see you next time.