July 10, 2006
Here are the most recent Vegetation Condition Maps from the USDA, indicating how our crops are developing this year as compared to last year. The scale runs from dark green (doing well) to dark brown/black (doing poorly). There is still a MAJOR difference between the two....Although experience has taught me ANYTHING can happen in this business, when you combine dry weather with world corn stocks projected to be the tightest in decades, as well as the tidal wave of hedge fund money now in the futures markets, it sure seems to make about as strong a bull case as you'll ever get in anything....I AM STILL VERY MUCH A BUYER.
Last Year - 6/22/05 to 7/5/05 This Year - 6/21/06 to 7/4/06
Make no mistake. I am not saying only buy the corn market. At the moment, corn is getting a lot of press as it enters a development phase when rain is an absolute necessity...But cotton, soybeans and wheat are also out there in the fields with varying degrees of problems and there is really no way to know which (if any) of them will be negatively affected by how the weather unfolds over the next few months. I firmly believe the smartest way to go is to own equal positions in all of them which can be done with either futures or through the purchase of call options...
I would also add that per the most recent CFTC Commitments of Traders report, small speculators (typically market fodder) are net short Corn, Soybeans and Wheat. This does not mean these markets have to go up but it sure doesn't hurt the case either.
Here are the charts...
Give me a call if you want to know more about any of these ideas...