Corn Market Holds Potential for White-Knuckle Ride
By CME Group - Wed 30 Jan 2013 09:22:57 CT
Related Keywords: Agriculture

From The Hightower Report

Producer Hedging Strategies Should Account for Volatility

Few commodities have a more uncertain outlook in 2013 than corn, given persistent drought in the central U.S. and the prospect a sharp jump in planted acres this spring may generate a record harvest near 15 billion bushels, according to The Hightower Report.

Considering other factors, such as South American crops and demand from ethanol producers and livestock feeders, the new-crop December corn futures contract "is quite capable of moving several dollars in either direction by the end of the year," Hightower analysts wrote in a new report.

"It will be difficult for either speculators or hedgers to maintain any single trading bias over the course of the upcoming season," the report said. Hightower suggested three possible, primarily options-based trading strategies for producers, noting "it may prove to be much more beneficial to go looking for volatility… as there is little chance that corn prices are going to stay subdued and remain within a tight trading range."

In late trading January 29, December corn futures fell 2 ¼ cents to $5.87 ¾ a bushel.

Click here for more on grain hedging strategies from The Hightower Report, a CME Group featured contributor.

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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

 
 
 
 
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