Futures For You by Carley Garner
TIME TO BUY GRAIN?
In theory, the grain complex should
have seen the harvest lows in the September/
October time frame. Should we
be buying agricultural commodities?
We all watched in awe as the grain
complex shattered their all-time-high
price records and continued to march
higher during the 2007–08 rally. Subsequently,
many retail traders and perhaps
even fund managers watched in
horror as the grains made their way
relentlessly lower in the summer of 2008.
Several theories attempt to explain
the magnitude of the up move from
ethanol demand, long-only hedge funds
and exchange traded fund (ETFs), and
sheer market exuberance in the absence
of an attractive equity market. One
thing’s for sure — the market overshot
its equilibrium price. It was unrealistic
to expect that market fundamentals could
maintain $8 corn, $13 wheat, and $17
soybeans, but nobody knew just high
prices might go before falling to a more
rational level, and those who tried to
“fight City Hall” likely paid dearly.