Grain Market Viewpoint

Money flow, political news, U.S. weather support $5 corn prices

Corn continues to benefit from increased interest in "money flow." Many larger funds and and bigger investors continue to look for ways to gain exposure to the crisis in the Black Sea region. Corn currently seems to look like one of the least riskiest ventures, with downside risk perhaps more limited than its available counterparts.

With strong U.S. corn demand and political uncertainties in both Argentina and Ukraine, the trade is increasingly more concerned about U.S. weather. The funds and large traders seem to feel that corn can give them additional geopolitical exposure while the downside could be somewhat limited until more defined U.S. weather patterns are identified. In other words, if the Ukraine/Russian conflict intensifies and starts to spook the US equity market, the corn market will also get spooked and in turn the price of corn will move higher and help offset some of the losses in US stocks. The hedge seems somewhat smart nearby considering the uncertainties of US weather and possible planting delays.

Ukraine & Russian producers becoming nervous

There is starting to be more fear, even though exports are still running smoothly, that both Ukraine and Russian producers are becoming more nervous. The talk is that farmers in both countries are much more worried about what happens in the days and weeks ahead. Many are considering the fact when the U.S. wages "economic warfare," as it often does, it can create very difficult times for those left in it's wake, i.e. an increasingly devalued currency and crippling inflation.

Remember the "rules of engagement" for the U.S. right now prohibit what the military calls "kinetic" methods...things that shoot and explode.  No Special Forces, no armored tanks, no long-range missiles. Instead only weapons of complete financial destruction!  Producers are obviously worried that if the U.S. is actually successful in their scheme of "financial warfare," then ripping inflation and a devaluing currency will leave them no choice but to hold onto their production as some  type of economic hedge.

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on May 7, 2014

Nice! I know this money will have a better outcome and the corn will be marketable. - Kris Krohn

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Kevin Van Trump

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20...
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