(This is an excerpt from an article I originally published on Seeking Alpha on August 13, 2013. Click here to read the entire piece.)
If there was any time for Teucrium Corn (CORN) to finally bounce, Monday (August 12, 2013) was it. The United States Department of Agriculture (USDA) announced its projection for record corn production this year:
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Source: FreeStockCharts.com
When I last wrote about corn production on July 1, 2013, I made the case for buying CORN as soon as some upside momentum appeared. {snip}…if seasonal patterns finally kick in, then my original premise for a contrarian/counter-rally implies that CORN has indeed finally bottomed here.
While high prices last year motivated a strong planting season, and weather this year eventually cooperated to complete planting of 97.4 million acres by mid-June, low prices now should prevent supply from exploding even further next year. The bounce on Monday could be the early signal for a rebound in prices.
My interest in these kinds of commodity cycles was born out of my development of a Commodity Crash Playbook in 2011 based largely on the ideas of Jeremy Grantham. Part of the playbook looks to buy commodities at key points in major declines and wait out a subsequent rally as fundamentals play out to eventually drive prices higher. A big thing I did not anticipate at that time was how the unfolding crash in commodities would come in disparate waves or that the core catalyst, an economic crash in China, would take so long in arriving (this past Sunday, 60 Minutes added its two-cents to on China’s massive real estate bubble, featuring entire cities with no one living in them. See: “China’s real estate bubble“).
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Be careful out there!
(This is an excerpt from an article I originally published on Seeking Alpha on August 13, 2013. Click here to read the entire piece.)
Long: CORN, POT, MOS