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The Grains Are On Fire.

I bet I’m the only guy you know whose wedding was filmed by the KGB. My friend, the TASS correspondent, Yuri, shot the entire assembled foreign press at the event at The Foreign Correspondents Club of Japan in the seventies, undoubtedly for their files in Moscow. No wonder they lost the cold war.

We’ve stayed in touch through the years, through the collapse of the Soviet Union and the many wars, revolutions, booms, and busts that followed. He now advises a Russian hedge fund. What else? He called me the other day to tell me I was right on track with my recommendation to buy the grains (click here for “Going Back Into the Ags” ), because the heat in Russia and the Ukraine this year was unbearable, and their crop was coming in at 20% below expectations. Yields were plummeting, and this would be good news not only for wheat, but corn and soybeans as well.

The country was once known as the bread basket of Europe, which is why it was invaded by Napoleon in 1812 and the Germans in 1942. They still have a sizeable impact on global prices. I have also gotten an assist from my trading partner in Canada, Mother Nature, whose torrential rains have wrecked much of the canola crop this year, helping to drag the prices of the other oil seeds northward.

Since my initial call on June 24, soybeans (NYSEARCA:SOYB) have risen by 10% to $3.00, while corn (NYSEARCA:CORN) has popped 13% to $4.10, and wheat (NYSEARCA:WEAT) has soared by a white hot 27% to $6.15. With profits like these, who needs the stock market, anyway? No doubt cash is pouring into the ags now because of the lack of attractive alternatives in stocks, bonds, currencies, commodities, and real estate. OK, my horse came in to show, but I’ll take that over a loser any day. I’ve noticed over the decades that when one does the hard research and gets the fundamental call right, all of the accidents and surprises tend to happen in your favor. That seems to be happening here. As for my old spy friend, I advised him to fill up a bathtub with cold water and soak in it to deal with the heat. That always worked when I was starving in Tokyo and couldn’t afford air conditioning, despite temperatures at 99 degrees with 99% humidity. At least it cooled me off for 15 minutes.