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$4.75-$5.00 corn thread from below
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Mizzou Tiger
Posted 8/25/2010 21:47 (#1332332 - in reply to #1332190)
Subject: RE: $4.75-$5.00 corn thread from below


If I truly knew that answer I would be selling it at a premium, but since my guess is as good as the next, it depends......

I agree short term we are bearish, will probably trade a decent crop and seasonal trend.

We all know that sub 1B carryout for corn starts to get people wound up, so there will be a push for corn acres. While the wheat issue was probably blow alittle out of the water, its still real, we are going to shrink stocks, plantings sound like they are going to be down too due to drought over there still and small nagging but real issues in production like threats in Australia, Pakistan, etc will add acres pressure.

Soybeans and the economy are probably the two powder kegs either way.

We know if the economy at least stays relatively stable then that is a neutral to slightly positive for commodities. Most due in part to continued consumption at a steady pace which is actually growing everyday. If things tank, and I mean 10 or 11 unemployment, Dow 6K, and China issues TANK then nothing will keep things propped up. If we get a bump in the economy in early 2011 to mid 2011 then that is obviously good and really adds to pressure.

Soybeans are an acre thing. If we increase carryout with a large crop, even if corn carry goes low, this will lessen the urgency. If the soy number comes in lower, which I think it could, then all of sudden we need soy and corn acres and we have wheat and cotton fighting for acres due to higher prices and a cultural tendency in those areas that have contributed to corn and soy the last couple of years.

So this thing could go either way, but I am of the opinion short term or not, corn has support in the $3.25 to $3.50 range in all but the worst situations. Now looking forward if even one bullish segment comes to fruition we trade about were we are now, hence the market has some price action in but not a lot either way (kind of like Wall Street right now, chicken with head cut off).

Late 2010 going into 2011 and even further if we start to pile on some bullish segments from multiple directions then we see $5.25-$5.50. In the outside chance we get a bolstered economy, weak corn and soy numbers, wheat issues, and then get into trouble with our corn and soy crop next year, we will see all time highs tested. I know a lot of people are saying that the 07' run is not like what we "might" be facing now. I agree, however in 07' the economy and oil took a pretty marginal commodity price and shoot it through the roof. I think we have more fundamental support with demand now and in the future which means a more stable price at a generally higher level. Take this an add another catalyst like increased demand with the economy, oil, or supply issues and here we go. If you look back to when commodity prices came back down to earth, most were saying here we go again, $2 corn and $5 soy. Well if you look at recent price action before the wheat run we have been well above that. That seems to indicate that while swings in price are real our overall range seems to be trending higher, and generally speaking only concrete fundamentals can drive this, not specs.

My opinion we already have two bullish segments, one is the corn number is going to be low and maybe shockingly low. Two is a half and half; the wheat issue is not done even if it stabilizes; wheat is buying acres along with cotton as we speak and the other is the economy, while we maybe treading water for awhile, I think we are just nervous with our surroundings which no longer contain unicorns and lollipops and people are just going to have to get used to it.
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