If I weren’t such a skeptic, I would suggest that the market has fallen into a predictable pattern –one day up, the next day down, or, and I hope I don’t complicate things here, one day down, the next day up. I know, I know, you are wondering how on earth I figured this pattern out. Well, let me tell you, it takes years of experience to be able to see such a complex pattern hidden in the undulating folds of a fear-driven, uncertain market gyrating daily. Actually, reading that last sentence, I realize the sentence is more convoluted than my pattern theory. I guess this is just how things are these days …
Speaking how things are, I find corn an interesting commodity these days. What with ethanol production, corn flakes, and feeding cattle and all, corn should be the talk of the market. Oh sure, everyone loves to talk about oil, but corn? Anyway, corn is one of those commodities that underlie inflation, ya know, like oil but without the pizzazz. Well, even if it isn’t a “sexy” trade, corn is something to watch as part of the big picture understanding I always talk about.
When crop reports come out, one can find both bullish and bearish arguments. The most recent statistics regarding corn demonstrate this, but the bearish arguments in this one are quite compelling when it comes to looking at the potential for inflation.
Reduced corn demand by livestock producers left quarterly U.S. corn inventories on June 1 at 3.67 billion bushels, higher than estimates of 3.29 billion bushels.
Certainly, reduced demand is a sign of lower prices for corn, and when the loss of demand comes from those who use corn products to feed other food sources, such as cows, pigs, and fowl, the inflationary picture looks a bit more stable.
Improved crop conditions with 53% of the U.S. corn crop in good-to-excellent condition as of Sept. 11.
And when the conditions support the potential for a decent harvest, the possibility of further price reduction is in the cards.
Corn prices fell to a one-month low and are nearly $1 a bushel below June’s all-time nearest-futures high of $7.9975.
And boom, there it is. The price is falling, and that is good news for those of us who would like to see less consumer money go to the essentials and more of the money go to purchasing discretionary products, such as cars, furniture, and well, you name it.
Oil is the hot commodity these days, but lately it has remained somewhat flat. This lackluster performance opens the door for a new hot commodity, for those looking to spice it up that is. Corn, that summertime treat, just might be for you. See, I told you corn is interesting …
Trade in the day – Invest in your life …
