A record short position in futures contracts and options is in place as speculators are piling in to profit from a decline in the price of corn. According to data compiled by Bloomberg from the CFTC, net short positions have risen to over 100,000 contracts over the past two weeks. The price of corn has been on the decline for sometime and analysts and money managers alike are predicting lower prices still.
Futures dropped 34 percent to $4.5975 on the Chicago Board of Trade this year, reaching a 34-month low of $4.55 on Aug. 6. Corn is the biggest decliner in the Standard & Poor’s GSCI Spot Index of 24 commodities, which retreated 2.9 percent. The MSCI All-Country World Index of equities rose 11 percent and the Bloomberg U.S. Treasury Bond index lost 2.6 percent.Option Trading and the Future of Option Alpha with Option Alpha’s Kirk Du Plessis
ValueWalk's Raul Panganiban interviews Kirk Du Plessis, Founder and CEO of Option Alpha, and discuss Option Alpha and his general approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with Option Alpha's Kirk Du Plessis
Today at noon the USDA will update its estimates for global crop production, demand, and stockpiles. The harvest in the U.S. alone is expected to jump 30% to over 14 billion bushels of corn. Most are expecting to see the price of corn fall below $4 per bushel, a price not seen since 2010.
These lower prices are welcome news to consumers as recent data from the United Nations shows global meat prices in June were within 2% of their all time highs. Corn has become an integral part of our food chain as it is widely used as feed for livestock and many derivatives are used as additives in processed foods. It also plays a role in the broader economy as ethanol is used as an additive in gasoline.