Tags: rick | pendergraft | corn | rally | profit | bullish

Too Many Bulls May Keep Corn Rally from Growing

By    |   Tuesday, 21 Sep 2010 08:55 AM

Perhaps it is the uncertainty of the economy or perhaps it is the volatility of the stock market, but investors are looking for returns in new places.

They are looking at opportunities in foreign exchange and in commodities.

One commodity in particular has garnered the attention of large speculators: corn.

During the past three months, corn futures have risen more than 50 percent. The PowerShares DB Agriculture ETF (DBA) has jumped more than 20 percent during this same time period and the newly released Teucrium Corn Fund (CORN) is up more than 35 percent.

Unfortunately, this performance may be attracting too much attention.

In last week’s Commitment of Traders report, large speculators had accumulated a net long position of more than 431,000 contracts. This is the biggest bullish position in the last five years, exceeding the previous high of 381,000 reached in early 2008.

It was in summer 2008 that corn reached $760 per contract (5000 bushels) as oil spiked that summer and corn jumped because of the fuel capabilities it holds.

My concern is that when we see a huge bullish position like we have now and yet we are far from the all-time high in price, the large speculators could start taking profits and we could have a mass exodus from the trade.

If the move out of corn is like it was in 2008, it might not happen immediately, but it is something you will want to keep an eye on.

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Perhaps it is the uncertainty of the economy or perhaps it is the volatility of the stock market, but investors are looking for returns in new places. They are looking at opportunities in foreign exchange and in commodities. One commodity in particular has garnered the...
rick,pendergraft,corn,rally,profit,bullish
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2010-55-21
Tuesday, 21 Sep 2010 08:55 AM
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