Corn, from Jeff Watson

July 12, 2012 |

 Corn had a horrific report earlier today. It rallied early, but sold off sharply. Buying opportunity or reason to jump ship…that's the conundrum. The mistress of the market sometimes plays games to separate us from our money.

Gary Rogan writes: 

I just came across this snippet:

"Corn prices fell in today's pit trade despite a bullish corn production forecast by the USDA due to dry/hot weather. CNBC suggested that one of the reasons for the slide was that the USDA will help farmers with the drought."

Can this be actually a cause of a sharp sell-off? How would anyone know to sell so quickly?

Also a more general question: what is the general lesson here, don't act on any news?

Bud Conrad writes:

I used to call myself a grain trader. The game was to predict the USDA numbers, then to see if you are more right than the consensus predictions. There is no secret that the Midwest is hot and killing corn. The question is how much?

If you know something that the market or the government don't, you have a chance. So today the government confirmed the well known situation. It common to see the markets "Sell the news". The question is whether it will continue to get worse (stay hot) in the future. Any few day of rain before July 4 can turn things around. At this date it looks like permanent loss.

I have no positions, but am sorry that the last month was a pretty good run on the situation that I should have seen. Aren't you afraid that the broker could be stealing your stash? I'm not reopening my futures accounts because of the lack of protection, which may be what the government wants, so prices won't be driven by speculators.


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