Trade to Win: Proven Strategies to Make Money

Chapter 13. Reaping Profits on the Farm

If I see a juicy piece of low-hanging fruit, I pluck it. When I see a market that is ripe for profits, I move to that arena. That is exactly what I have been doing recently with commodities. As noted previously, I am a trader, and if money can be made buying or selling a product, I am probably trading it. Over the years, I have traded various commodities, including oil and energy, gold and precious metals, pork and beef. Lately, corn has been on my radar screen. Oil prices have been sharply increasing for many months, and that fact has resulted in a new focus on the production of biofuels including ethanol. Corn is one of the agricultural products needed for that technology. With demand rising, stockpiles have also been falling. According to AP business writer Stevenson Jacobs, in April 2008, the U.S. Department of Agriculture predicted that farmers in the United States would plant less corn in 2008 than in the previous year—8 percent less to be exact. Greater demand paired with less supply always translates into price increases, and that has been the case with corn. On April 3, 2008, corn jumped to $6 a bushel—a record high.

The United States is the largest producer of corn in the world, and our strain on supply will have a worldwide effect. As Jacobs explains, corn is not only a U.S. food staple, but corn and corn syrup are also used in a wide array of products. In addition, corn is a major source of feed for livestock. As supplies shrink, ...