Is the corn harvest in trouble?

Posted Sep 16th 2009 2:20PM by Connie Madon
Filed under: Rumors, Commodities, Oil, Agriculture

Why worry about the corn market, you say? Well corn cereals, corn oil and corn products that depend on corn are sensitive to the price of corn. Add to this mix the fact that we still have an ethanol program in place that is taking 15% of the crop, and you have the hair trigger that drove corn and grain prices sharply higher yesterday.

There was a rumor that we are having an early frost next week. That's number one. Now, add to this the fact that only 12% of the corn crop is "mature" compared to 37% last year and off we go. Then, too, you've had big speculators that have been short for some time.

Yesterday the trigger was pulled and all of these guys ran to the buy side. The shorts scrambled to cover and new buying came into the pit. December corn rose 28.75 cents to $3.465 per bushel (each 1 cent equals $50.00 or $143.75), just shy of the daily 30 cent limit. Soybeans shot up 51 cents to $9.60 per bushel or $2550.00

In other markets, October crude oil rose $2.47 per barrel to close at $70.93, and natural gas was up 2.3 cents to $3.32 per BTU.

Gold again traded above $1000.00 per ounce

Anyone who has ever traded commodities, especially the grains, knows that just one rumor can drive prices up rapidly. If you happen to be on the wrong side of the market as was the case for many speculators, its goodbye to your money. You can be right on ten trades, but it only takes one to wipe you out. You absolutely must use stop loss orders to avoid such a catastrophe. Even when trading the stock market, stop losses are a good idea. Decide on how much loss you can handle and then place your stop loss at that point below the market. For example, if you have decided that you will risk $500.00 on any trade, that point below the market is where your stop loss belongs.

Do you use stop loss orders in your trading?

Tags: corn harvest, corn sharply higher, CornHarvest, CornSharplyHigher, early frost, inthenews

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Reader Comments (Page 1 of 1)

9-16-2009 @ 3:07PM

ij70 said...

"Now, add to this the fact that only 12% of the corn crop is "mature" compared to 37% last year and off we go. "

Fascinating. Is that result of Global Warming or Cooling? Anybody know?

9-16-2009 @ 8:47PM

william lindblad said...

Should be boom - so say USDA and the WSJ.
More than enough to offset the drought in Texas.
There will be problems, but not this year.
A good deal of Cal. has water problems. The Ogalala is sinking rapidly. The population keeps growing.
It is a matter of time.

9-16-2009 @ 10:25PM

Iridium said...

and why do we allow massive speculation again? If we don't get the early frost will corn prices tumble?

This scam that causes every normal person to pay 3-4 times the actual value of a product needs to be shut down

9-17-2009 @ 8:58AM

Beltway Greg said...

Connie, who is the king of market prognosticators? What did I tell you back in August? Commodity markets are so rigged but I do love them so. Now watch out and see what happens to the fertilizer markets.

Everyone else, kiss the ring.