Professional Farmers of America (Pro Farmer), a web site and advisory service which a lot of grain analysts pay attention to, pegged the 2008 U.S. corn crop at 12.152 billion bushels, and cut their yield-to-acre estimate to 153.3 bushels per acre, lower than the USDA’s last forecast of 155. It looks like the crop is a bit immature given spring flooding that delayed planting, and Pro Farmer estimates an early frost could lower the yield-per-acre to 147. There was news of frost already hitting the upper Midwest, although not in key growing regions. But dry weather is in the forecast, adding to the bullish tone.
Commenting on the Illinois crop, Pro Farmer said “maturity should not present a major issue for the Illinois crop under normal conditions the remainder of the growing season. But the poor start to the growing season and dry conditions have taken some ‘off the top’ of this year’s crop.”
Dow Jones reported this morning that Morgan Stanley called the USDA’s forecast for the U.S. 2008-2009 corn yield “too aggressive” after surveying fields in Illinois, Iowa and Minnesota, stating many fields showed “immature, thirsty corn suffering from nitrogen leaching caused by heavy rains in June.”
Corn futures gained 10 percent last week, and I see more upside. I am recommending the December 660/700 call spread. It offers a maximum profit of about $2,000 not including your commissions, and a cost of about $550, not including commissions, which represents your defined risk. These options expire November 21.
Feel free to call me with any questions you have about this strategy or others to suit your particular account size and risk tolerance. Ask about our special half-off commissions offer for new clients.
Phillip Streible is a Senior Market Strategist with Lind Plus. He can be reached at 800-803-8037 or via email at pstreible@lind-waldock.com.
Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Lind-Waldock believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.
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