Tuesday, April 10, 2007

Here we go...

Think speculative money is leaving corn? Maybe not.
Corn investors are gleeful about the first bear market in two years.

Goldman Sachs Group Inc. predicts a rebound that will turn $10 million into $18.15 million by the time Iowa farmers harvest their crop in October. Krom River Partners LLP and the Mother Earth Investment AG fund are so certain a recovery is imminent they're buying corn during the current rout. [More]

This kind of press in investor papers is one reason we're not seeing a new "plateau" in prices. We're seeing higher mountain ranges.

They've even helpfully calculated exactly how much you can make.
Goldman Sachs analyst Jeffrey Currie in London forecast on March 30 that corn will rise to $4.15 a bushel in six months from $3.66 on April 5. Because of the leverage involved in futures markets -- the exchange requires a deposit of only $1,350 to control $18,300 of corn -- that would create a 181 percent return by the time of the Iowa harvest.

What could go wrong?

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