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Think $5 Corn Is Expensive? Some Are Betting On $10 Next Year
Cattle Network ^ | 11/12/10

Posted on 11/15/2010 5:23:28 PM PST by FromLori

The corn market’s rally above $5 a bushel this fall has stirred growing consternation among livestock producers and others dependent on the largest U.S. crop. As the global grain supply outlook tightens, some traders in Chicago are placing bets that prices may double next year.

Over the past week, trading firms including JPMorgan Chase & Co. and MF Global Holdings Ltd. bought call option contracts that would pay off if corn rose above $10 or $11 a bushel next spring. The options are traded at Chicago-based CME Group, along with futures based on grain, cattle, hogs and other commodities.

It’s rare to see trading in so-called “strike” prices at such lofty levels, CME options traders say. The recent trading reflects heightened concern that smaller-than-expected U.S. crops and increasing demand from top buyers such as China will force grain prices even higher in 2011, said Ed Van, a broker in the CME’s corn options pit.

“There’s real risk out there” for higher prices, Van said. He’s been trading in the corn options pit since the contract was launched in 1985 and said he’d never seen an $11 call traded until the past week. “Price rationing could take it up further. I would certainly think we’re headed higher.”

Concern over tight supplies also spilled into the soybean market, where $20 call options traded over the past week, a premium of more than 50 percent over current futures prices.

(Excerpt) Read more at cattlenetwork.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: agriculture; corn; economy; farming; gardening; nonsense; ntsa; youcallitcorn
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1 posted on 11/15/2010 5:23:31 PM PST by FromLori
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To: FromLori

Just hold a stainer under your boo boo the next day wash it off and eat it again


2 posted on 11/15/2010 5:24:31 PM PST by al baby (Hi Mom REMEMBER FREE REPUBLIC IN YOUR WILL. I DID)
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To: FromLori

Deer meat just got more expensive.


3 posted on 11/15/2010 5:25:37 PM PST by ConservaTexan (February 6, 1911)
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To: al baby

I like corn, it tastes real sweet

I don’t like peas, they taste like feet

Corn is the king of the veggie fruit group

And it looks te same when it’s in your poop

/charlie waffles


4 posted on 11/15/2010 5:26:48 PM PST by Secret Agent Man (I'd like to tell you, but then I'd have to kill you.)
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To: FromLori

Prices are not going up, the dollar is going down.


5 posted on 11/15/2010 5:29:55 PM PST by MeganC (January 20, 2013)
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To: FromLori

I hope the poor Mexicans have lots of ADM stock.


6 posted on 11/15/2010 5:33:06 PM PST by jimfree (In 2012 Sarah Palin will continue to have more relevant quality executive experience than B. Obama.)
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To: FromLori

Cows now have to compete with cars for corn and farmers don’t get government subsidies for corn the way fuel producers do.


7 posted on 11/15/2010 5:33:38 PM PST by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: MeganC

I believe you are only partially Correcto Mundo!
The drive for Ethanol fuel is a contributing factor, and is a driver too!


8 posted on 11/15/2010 5:38:37 PM PST by J Edgar
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To: FromLori

Easy solution. Eliminate the requirement that ethanol be used in fuels and eliminate the $0.50 per gallon federal subsidy on ethanol.


9 posted on 11/15/2010 5:39:53 PM PST by Blood of Tyrants (Islam is the religion of Satan and Mohammed was his minion.)
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To: FromLori

$10.00 Holy crap! I should go and buy my Dads farm back!


10 posted on 11/15/2010 5:47:37 PM PST by Cheetahcat (Zero the Wright kind of Racist! We are in a state of War with Democrats)
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To: Cheetahcat

It won’t happen, much more corn will be grown next year.

Supply / Demand What a concept


11 posted on 11/15/2010 5:58:50 PM PST by reefdiver ("Let His day's be few And another takes His office")
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To: reefdiver
It won’t happen, much more corn will be grown next year. Supply / Demand What a concept

One word: Ethanol

12 posted on 11/15/2010 5:59:51 PM PST by dirtboy
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To: FromLori

“Over the past week, trading firms including JPMorgan Chase & Co. and MF Global Holdings Ltd. bought call option contracts that would pay off if corn rose above $10 or $11 a bushel next spring. The options are traded at Chicago-based CME Group, along with futures based on grain, cattle, hogs and other commodities.”

Jim Roger back in 1989 said that corn would be about $7.00 a bushel in a few years.


13 posted on 11/15/2010 6:13:01 PM PST by steveab (When was the last time someone tried to sell you a CO2 induced climate control system for your home?)
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To: dirtboy
One word: Ethanol

If you really believe this and act accordingly, next year you can post as dirtboy millionaire.

14 posted on 11/15/2010 6:13:37 PM PST by Doe Eyes
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To: reefdiver
It won’t happen, much more corn will be grown next year. Supply / Demand What a concept

Exactly. 30% of the farmland in my area is unused. 2 years ago when corn went from 2.00 to 6.00 lot's of planters that were gathering dust were put to use.

15 posted on 11/15/2010 6:17:15 PM PST by hoyt-clagwell
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To: FromLori

Why does the gubmit push subsidies for a fuel from corn, for us to burn our food in our cars, and fight us like hell when we try to drill and produce oil and gas in the US?


16 posted on 11/15/2010 6:20:56 PM PST by FlyingEagle
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To: FlyingEagle
"Why does the gubmit push subsidies for a fuel from corn, for us to burn our food in our cars, and fight us like hell when we try to drill and produce oil and gas in the US?"

Oh, stupidity has a fine tradition in government, going all the way back to the 1800's when they were giving lever-action rifles to the indians while at the same time sending in the army to force those indians back on to reservations. That policy didn't work out so well for Custer.

17 posted on 11/15/2010 6:27:37 PM PST by Flag_This (Real presidents don't bow.)
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To: ConservaTexan
Deer corn is down to $6.50 @50# vs the $9.00 the Summer of '09 when these same people were screwing with the markets...it then lowered that September.

We usually buy around 4K# per year.

18 posted on 11/15/2010 6:29:18 PM PST by Deaf Smith
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To: reefdiver

Plant more corn,and less wheat or soybeans will be planted.Beans are at 12.80 and wheat is 7.00 for March delivery.How high do you think they will go?


19 posted on 11/15/2010 6:31:37 PM PST by Farmer Dean (stop worrying about what they want to do to you,start thinking about what you want to do to them)
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To: reefdiver

It won’t happen, much more corn will be grown next year.

~~~

I think that’s just what’s gunna happen too,,,

We have had 4 bumper crops in a row in my area,,,

Down some this year,,,

Never enough storage space,,,

The farmers wind up having to dump it on the ground,,,

“Corn mountain” is just north of town...


20 posted on 11/15/2010 6:50:48 PM PST by 1COUNTER-MORTER-68 (THROWING ANOTHER BULLET-RIDDLED TV IN THE PILE OUT BACK~~~~~)
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