The USDA is projecting record corn crops this year. Production is set to
increase by more than 25% over last year's drought ridden crop.
Corn prices crashed in anticipation… down over 40% since last year.
This is a basic law of supply and demand. Supply is set to increase, yet
demand will remain relatively stable… so prices fall. This is how
prices are supposed to work… but it's overdone. And corn prices are set
to soar…
You see, traders expect the rout to continue. But they are too bearish.
We can see this clearly by looking at the Commitment of Traders (COT)
report for Corn.
The COT report shows the real bets of futures traders… folks that have
real money at stake. And as contrarians, we know that when everyone bets
on the same outcome, the opposite usually occurs.
That's exactly where the corn market is today. Futures traders haven't been this bearish in years. Take a look...
The last time the COT was this negative, corn prices increased 28% over the next four months.
This is a classic contrarian bet… Everyone expects perfect news in the
corn market. They expect a perfect crop… a record crop. And they expect
prices to continue downward.
There is no room for bad news.
Any disturbances will send prices soaring. And while you've probably
never bet on corn prices, it's a safe trade to make right now.
If you don't have a futures account, the simplest way to invest is the
Teucrium Corn ETF (NYSE: CORN). This is a simple fund that accurately
tracks the corn futures market.
CORN does charge a ridiculous 5% annual expense ratio. But it's the only viable way to make the trade.
If we walk away with a 25%-plus gain in a few months, giving up a few percent in expenses is fine by me. Check it out.
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