June 16, 2010 – Grains See the Light at the End of the Tunnel

Featured Trades: (CORN)
Teucrium Agricultural Trust Corn Fund


2) Grains See the Light at the End of the Tunnel. I am a huge long term bull on the grains, but abandoned my trading call in January when the USDA published a spectacularly bullish forecast for most crops for 2010. Not only were plantings up, so were yields per bushel. Since then, the ags have been in a world of hurt, plumbing new contract lows, as their contracts wandered aimlessly in the wilderness. I now see the light at the end of the tunnel. Heavy rain in western Canada has seriously crippled that countries wheat crop, while a once in 25 year locust plague threatens draught ridden Australia’s crop. Oats have put in some interesting technical action lately. Now corn is showing some bottoming moves too, no doubt assisted by China’s recent 1 million tonne purchase to cope with scant rainfall in the western part of their country. It also looks like the mindless diversion of one third of the US corn crop for fermentation into ethanol for fuel is going to continue for the foreseeable future (click here for my ethanol piece). Aiding investors this time around is the launch last week of the Teucrium Agricultural Trust Corn Fund (CORN), the first ever dedicated corn ETF, which will no doubt bring in some new buying on its own. No more hassle with opening futures accounts or dealing with an obnoxious CFTC. Exchange traded funds for the wheat and soybeans are expected to follow. By going long corn, you effectively own a rising standard of living in the emerging markets, as well as fresh water shortages, famine, and bad weather in grain producing countries. Sounds like a ‘buy’ to me.

Corny.png


CornETF.png


Corn9.jpg

Comments are closed.