Riders on the Corn: Investing Through the Stormy Weather

It's got the juice.

We strongly recommend watching for a buy signal in the corn market at this time. We believe there's a significant misjudgment in play, particularly regarding the USDA's estimate of a comfortable 2.2 million carryout in the U.S. This number, is overly optimistic.

Here are a few reasons behind our bullish stance:

1. Improved Demand: We anticipate a notable uptick in demand over the next 12 months compared to the previous year. Lower prices tend to attract higher demand, (cycle, cycle, cycle) and the post-African Swine Fever (ASF) situation in China is likely to result in increased feed demand as they rebuild their hog herd.

2. Declining Corn Yields: Corn yields have room to fall further, especially with the ongoing challenges facing Brazilian corn production and the looming risk of another severe drought in North America during the 2024 growing season.

3. Global Shortage Risk: If both Brazil and the U.S. experience production shortfalls, as we believe is probable, we could be facing a critical corn shortage. This situation would have far-reaching implications for the global corn market.

China's recent weather-related challenges during the current growing season are expected to lead to a shortage in grain supplies, intensifying the need for international corn sourcing.

We see significant potential for corn prices to rise in the near future.