(This is an excerpt from an article I originally published on Seeking Alpha on July 1, 2013. Click here to read the entire piece.)
Last summer, America’s corn fields were plagued by drought. The conditions were dire across the U.S. at historic proportions. From the U.S. Drought Monitor July 25, 2012:
{snip}
At the time, corn prices were soaring in anticipation of a poor harvest. Yet, I recommended buying puts on Teucrium Corn (CORN), a fund which tracks “the daily changes in percentage terms of a weighted average of the closing settlement prices for three futures contracts for corn that are traded on the CBOT.” Conditions were so extreme that the chances of things getting at least marginally better seemed very high. {snip}
Source: FreeStockCharts.com
Now, fast-forward a year later, and the U.S. seems on the verge of producing another bumper crop. From the United States Department of Agriculture, National Agricultural Statistics Service (USDA’s NASS):
{snip}
The latest news on the size of the planted corn crop sent CORN plunging 4.5% to a new one-year low. While the selling continues a downtrend that is well-established from last year’s drought-driven highs, I am now thinking it is time to consider buying CORN. This is mostly speculation, but after watching this cycle swing over and over again, I think the trade presents reasonable risk/reward.
{snip}
Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on July 1, 2013. Click here to read the entire piece.)
Full disclosure: no positions