Exports, Ethanol, Expectations to Keep Corn Prices High (CORN)

Tres Knippa of Lotus Brokerage points out that there are a few key current dynamics that are having a huge impact on corn. Specifically, that government-backed ethanol producers now consume 40% of the nation’s corn crop, while a weak dollar and strong demand from new markets abroad is causing more agricultural exports. Crop yield is always the wildcard, as there is no way to predict the weather but an in-line forecast is baked in.

It all boils down to what we have in storage, Knippa says. “Right now, the big story is — how much corn do we have in the bins, in storage, in carry-out?” He says we need 93 or 94 million acres planted just to maintain what we have in storage; any reduction in those acres makes that corn availability dangerously low. As the number was revised downward, we’re closing in on $7 for corn. And, as Knippa says, as the price rises, the prospect of the government getting flack for using 40% of it for ethanol production will also rise.

Related ETN: Teucrium Corn (NYSE:CORN)

See the complete BREAKOUT video Below:

Leave a Reply

Your email address will not be published. Required fields are marked *