Tuesday, March 2, 2010

Corn Futures Down on Dollar, Inventory

Corn Futures, Dollar, Corn Inventory

Corn futures dropped again as the stronger U.S. dollar made investments and exports unattractive, and the significant global corn inventory has left no base to work from.

As with wheat, as mentioned in my last post, when the prices of grains surged in 2008, farmers seeded huge amounts of wheat, corn, soybeans and rice, which all but assured there would be downward pressure on grain prices in the years ahead.

I'm not sure why the farmers continue to do this, or if they're being told wrongly, but farmers need to understand that if they put huge seedings of crops in the year after a big price increase, they can be sure huge numbers of farmers around the world will do the same.

While there is always the possibility of weather having a devastating impact on some crops, as last year showed, there was so much grain on the market that even when their were droughts or other weather problems, there was so much available it didn't have much of an impact.

With corn this is the story, and will continue to be a bearish story until some farmers drop planting it based on past performance.

Eventually there will be major demand around the world for food, but we are far from that with grains at this time, even though analysts and wealthy investors like Jim Rogers tout food and agriculture in general as a great future investment.

It will be all of that, but when farmers plant far more than global demand warrants, we're always going see downward pressure on corn futures and other grains until it corrects itself.

Corn Futures, Dollar, Corn Inventory

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