February 1, 2007
How many times have you had some dumbass commodity broker call you about a market that has a great, great story (fundamentals) and a chart that looked like a rocket? How many times have you bought it, then watched that market do nothing but go south for months on end?
If you have been around the markets for long at all, you probably have had this experience...At any rate, in my 26 years in this business, I know I have been that dumbass broker on many occasions...And I know many of you have bought markets with me that looked explosive, then had them die...
You CERTAINLY have seen the press about Ethanol and the Corn market lately...It is ALL OVER the place, and all of it HIGHLY BULLISH, right down to my actually having seen several articles/quotes suggesting, "We might run out of Corn this year!".
I'm not going to say much more than I think Corn could easily drop $.75 to $1.00 from current levels. My guess is that every single dollar of fund money that would want to buy corn HAS bought corn...and the next thing we may see is the Corn market doing what Crude Oil has done (remember how INCREDIBLY bullish everything was last summer in energies?), that being, absolutely going in the tank...Yes, I may end up looking like an idiot but every real top I have ever seen was accompanied by so much bullish rhetoric, the idea of going short just looked, sounded and felt totally dumb...not to mention frightening...And Corn totally fits that equation right now.
This Corn Story is too big for me to ignore...It IS everywhere.
For what it's worth, US corn acreage is projected to be the highest in 60 years in 2007.
I also note that Crude Oil just rallied about $8.00 in the last 11 days. Corn, which is SUPPOSED to be supported by higher Crude prices (due to the ethanol story) actually dropped about 15 cents during those same 11 days.
Call me if you, too, want to be stupid...
Here is the contract I'd do it in...That last leap, from 370 to 430 was right before and after
the latest USDA Supply-Demand Report...I would think that everybody who wants to be
on this is already on it....