ebook essays pieces of the puzzle
Thursday, July 21st, 2011
good luck

Corn has made regular appearances in pix, including “parabolic dreams” about it in the second-ever posting on this site.

The grain is getting a lot of attention these days.  But first, some longer-term considerations:  The politics of ethanol seem to have shifted a bit of late.  Agricultural subsidies are coming under increased fire, with budgets out of control and most farmers doing very well.  High-fructose corn syrup is seen to contribute greatly to the obesity problem we face.  But, the ag bandwagon (hay wagon?) is full of investors.  From day traders to hedge funds, people are excited about the prospects for corn and other grains, and therefore farmland.  (Look at the recent price changes for land — although I wonder whether the value is there.)

For now, though, the debate about corn is focusing on more traditional concerns:  the weather, yields, and stocks (in storage, not those paper electronic kinds).  The June 30 acreage report from the USDA shocked the market and caused a downdraft.  The price has recovered somewhat, but volatility is here to stay.  All of the anecdotal evidence (including my own few observations of fields) is in one corner, with the USDA numbers widely disbelieved.  Most farmers and market observers seem to think that the crazy weather patterns of this year are likely to lead to a poor harvest and low stocks ending the season.

It’s a great opportunity for anyone that has an edge of some sort.  If you’re trading corn without one now, all I can say is, “Good luck.”  (Chart:  Bloomberg terminal.  Prices based upon nearby futures.)