Corn Quarterly Stocks Review Paves Road for Put Sellers

The news media has been providing up quite a few reports, details and figures concerning raising food costs. "Food inflation" has grow WOW Gold to be an in vogue subject amongst the pundits.

So here are the actual numbers. For if you peel back the glossy media cover, there actually is some substance to this theme - sufficient so that you'll be able to most likely use it to bank some solid premiums within the coming months. Corn costs have benefited from what is expected to become the tightest stocks to usage ratio in history this year (5.0%). Stocks to usage measures the amount of corn supply on hand at the finish in the crop year (Sept. 10) vs. the expected demand for the coming year.

On March 31, the USDA released its quarterly grain stocks report which shocked corn traders. The report pegged US stocks on hand at 6.523 billion bushels, about 165 billion bushels short of trade expectations. What it indicates, in short, is the fact that in spite of higher prices, we're applying much more corn than most everyone had expected. When 1 considers that practically 35% of last year's US corn crop went into ethanol production, there is certainly that significantly less corn on the market to meet the world's growing demand for feedgrains. Feedgrain demand has turn out to be particularly acute in developing economies such as China, Brazil and India where newly affluent middle classes are establishing appetites for meat.

However, choice sellers that choose to sell deep, deep out of the capital strikes need to look to go further out in time. This signifies looking at September - December contracts. This is referred to as new crop corn, as these contracts will probably be satisfied using the 2011 corn harvest (not the stocks currently on hand). Some in the trade have recommended that greater prices will result in much more corn acres becoming planted within the US this Spring. This would in turn "alleviate" the bull market conditions that have persisted for the past 9 months. These traders may would like to reconsider.

You may think about adding some call premium in the late May possibly, June time period, turning the trade into a strangle. This approach would seek Tera Gold to benefit from a potential period of profit taking once the crop is in the ground.)