Tom Dyson writes in DailyWealth that he believes corn prices are set to drop sharply – and reiterates his favorite plays are live cattle.
After thinking about corn a bit, I also now believe that there is more risk on the downside. Potential catalysts for sending corn lower are the impending bust of corn-based ethanol, and a bumper crop. Catalysts that would send corn higher would be a wiped out crop. However with the bearish news that has come out in the past couple of weeks, it’s looking more and more like the crop is fine.
I recently dipped my toe in this trade, and shorted the Dec Mini-corn contract yesterday. I may look to add another Mini contract or two on further weakness, and will close the position on any significant sign of price strength.
On the live cattle front, here’s a quick take by Dennis Smith over at Barchart.com. He believes the recent sell-off in live cattle is overdone, and is looking to re-enter the position when support is found.
I still have one live cattle contract that – somehow – I have not been stopped out of yet. Hanging on by a thread. But I am also looking at the longer dated live cattle and lean hog contracts closely.