"No man can become rich without himself enriching others"
Andrew Carnegie

Friday, July 20, 2012

Bushels of Speculation in Corn Fund

Maize (Photo credit: amcdj)
In the Midwest, we are in the midst of the worst drought in over 50 years. It's hard to complain about heat here in Chicago, but the breadbasket of the world is taking a real hit. Persistent and extreme hot and dry conditions have prompted the USDA to make successive cuts to crop projections over the past several weeks. The current projection cuts sit in the midteens. That figure marks a significantly larger supply shock than had been expected. Not surprisingly, corn prices have skyrocketed. September corn futures are up over 50% from mid-June with later-month contracts following suit.
The fallout of the aridity hasn't been relegated to the corn markets. Wheat and beans have seen substantial positive price performance. Front-month wheat has jumped to over $9 per bushel from roughly $6.30 a month ago. Over the same period, soybeans jumped to $16.80 from $13.80.
It is noteworthy that, even with the projection cuts for the corn crop, this harvest is still set to be one of the largest on the record. Corn prices could fall once harvest time comes. That said, weather reports don't show signs of relief. Across the Midwest, arid weather is due to continue with negligible amounts of rain expected for at least the next week or so. All this makes for continued strong price pressure for corn and has paid off for the Teucrium Corn Fund(CORN). Individual commodities are notoriously volatile, so an investment in CORN is only for a speculative investor willing to actively manage their allocation.... Continue to read.
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