Tags: Gartman | corn | chicken | price

Gartman: Corn Might Fall Another 16 Percent Soon

By    |   Monday, 27 April 2015 08:00 AM

Corn prices have plunged 29 percent during the past year, and Dennis Gartman, publisher of The Gartman Letter, says the trend will continue.

"I think that corn has a problem at this point," he told CNBC. And what is the problem?

The biggest concern is the recent avian flu outbreak among chickens at farms in Wisconsin and Iowa. "What's really interesting is the psychology in avian flu," he noted.

"If the avian flu continues to break out, it means there are migratory birds moving avian flu, not one flock to another in a confined area. That will ultimately make the consumer very hesitant to buy poultry. And poultry is a very big user of corn. That's terribly bearish for corn."

However, Gartman added, "It's bullish for beef because people will substitute beef and pork for the chicken that they would normally have consumed."

An oversupply of corn will also be bearish for the commodity, he argued. "American farmers are going to plant a lot of corn this year," even though "they still haven't sold much of last year's crop," he stated. "This could put corn prices under some very real pressure."

Corn traded around $3.71 a bushel Friday. And how far could it drop? As much as 50 to 60 cents a bushel "in the not-very-distant future," Gartman maintained.

To be sure, some experts are turning enthusiastic toward commodities at least for the short term.

The Bloomberg Commodity Index has jumped 5.4 percent from the more-than-10-year low it hit March 17, helped by rallies in oil, copper and sugar among other items.

The dollar's correction this month from the multi-year highs it reached against a range of currencies in previous months has helped commodities. And so have tenuous signs of an economic recovery in Europe and the continued U.S. economic rebound, as tepid as it may be.

"People are finding comfort that Europe is stimulating, that U.S. growth is being maintained," George Zivic, manager of the Oppenheimer Commodity Strategy Total Return fund, told The Wall Street Journal. "If you are a value commodity investor, I do believe there are opportunities here."

As for Europe, he was referring to the European Central Bank's 60 billion-euro monthly bond purchases.

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Corn prices have plunged 29 percent during the past year, and Dennis Gartman, publisher of The Gartman Letter, says the trend will continue.
Gartman, corn, chicken, price
369
2015-00-27
Monday, 27 April 2015 08:00 AM
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