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Corn - Investment Advice
Old 08-08-2006, 06:02 PM   #1
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Corn - Investment Advice

Ok, so I'm reading the WSJ - there is this story that the cash price for corn is about $2 a bushel right now.
A supposed "gold rush" is building with ethanol - yet the price is $2 a bushel. near record low levels...
It's acting like corn ethanol doesn't exist.
Apparently there have been huge surpluses of corn the last 2 years...
Like 2.1 billion bu. surplus this fall alone...largest in 10 years...

Well there is someone that says that after harvest - he expects a rapid price increase and future prices to supply record demand...- maybe 50 cents upside
"We have been saying consistently to store as much corn as you can, because that will be your greatest asset for the next couple years - We believe that the cash prices we see in the next couple months may be our lowest for a very long time to come".

US Dept Agriculture economists pretty much agree - "The cash corn market is on the cusp of a potential sea change..."

Well anyway, this could be a bad decision but I want to know how to play this besides messing with options...are there any easier tools - like etf, Mutual Funds or ? that could play with this, or am I better off getting my account authorized for options and taking a crash course?


Thanks
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Re: Corn - Investment Advice
Old 08-08-2006, 10:40 PM   #2
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Re: Corn - Investment Advice

Fertilizer company's stock. POT, AGU or MOS.

Disclaimer, I hold a lot of POT.
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Re: Corn - Investment Advice
Old 08-08-2006, 10:51 PM   #3
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Re: Corn - Investment Advice

Quote:
Originally Posted by IntoTheMystic
Well anyway, this could be a bad decision but I want to know how to play this besides messing with options...are there any easier tools - like etf, Mutual Funds or ? that could play with this, or am I better off getting my account authorized for options and taking a crash course?
Thanks
If what you want is corn, you will need a commodity account. There are no equity or index options on corn; you would need buy futures options through a commodity broker, or take a long futures contract.

Not exactly relaxing stuff for a retiree, though I suppose it might work out very well.

Ha
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Re: Corn - Investment Advice
Old 08-08-2006, 11:19 PM   #4
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Re: Corn - Investment Advice

Advice on commodities: Eat the sweet corn. Smoke the POT.

Use index funds for serious investing.
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Re: Corn - Investment Advice
Old 08-08-2006, 11:34 PM   #5
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Re: Corn - Investment Advice

I would be very cautious about investing in commodoties markets. . The only corn I would be buying comes on a cob and runs about 5 for a dollar....

But if you are determined to 'cash in' on the ethanol craze you could buy stock in Dupont or Monsanto - both sell genetically modified seeds.or an ethanol producer - ADM is the largest producer of ethanol - here is an excellent article that I cherry picked this info from
http://www.businessweek.com/technolo...gn_id=rss_null

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Re: Corn - Investment Advice
Old 08-09-2006, 06:44 AM   #6
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Re: Corn - Investment Advice

I've no idea what the future holds for corn and I want nothing to do with individual commodity speculattions, but you could pretty easily speculate on the future price of corn by opening a futures account as Ha suggests. The thing about futures is that you can (and many do) buy futures using very significant leverage, which magnifies gains and losses. If you wish to do this in a (vaguely) sane manner, put a small sum in the account and buy a long-dated future (maybe 6 months out, if you can get it) and use little or no leverage. Without using leverage, you cannot lose more than the notional amount which you have fully backed with cash. If you use leverage, well, margin calls are a bitch I hear...
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Re: Corn - Investment Advice
Old 08-09-2006, 08:40 AM   #7
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Re: Corn - Investment Advice

Or buy a couple of grain bins, and fill 'em up...
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Re: Corn - Investment Advice
Old 08-09-2006, 09:14 AM   #8
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Re: Corn - Investment Advice

Thanks everybody.
I'm realizing I don't have the commodity speculator temperment or the depth of knowledge/experience to come out on top, let alone all the attention I would probably end up spending on it would be a detriment to my other activities like sleeping...

If I was a corn farmer I would do as HFWR suggests and buy more bins and just store and wait for better prices..

I should probably buy some POT - there is really big demand for it.
I read this about it - Pot demand was expected to increase amid a growing biofuel industry...crops grown for biofuel are intense pot users....

I have just now found 2 ETF's that are commodity focused :

DBC - based on six liquid futures contracts on Light Sweet Crude Oil Heating Oil Gold Aluminum Corn and Wheat.

GSG - 24 commodities

Corn is a small factor in both these - maybe a good thing and energy a big part of both...


These and pot would probably be more to my liking Thanks again. Be cool dudes... 8)
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Re: Corn - Investment Advice
Old 08-09-2006, 09:34 AM   #9
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Re: Corn - Investment Advice

For short term gains, corn does look interesting. Beware how long you hold it though.

Corn ethonal is a long term loosing proposition. Work is being done to figure out how to produce ethonal from switch grass which costs much less energy to produce (it is basically a weed).

While that is under developement, corn may return wonderful gains. However, once the process is figured out, the bottom will fall out of corn.
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Re: Corn - Investment Advice
Old 08-09-2006, 12:16 PM   #10
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Re: Corn - Investment Advice

From CNN-Money...

http://money.cnn.com/2006/08/08/news...ex.htm?cnn=yes

Quote:
Only about 800 service stations in the United States, out of a total of 168,000, pump E85. There's not a single E85 pump, for example, in all of New England.

You won't be surprised to learn that the big oil companies are not, as a rule, interested in selling E85.

But Wal-Mart (Charts) is. The giant retailer is considering selling ethanol at the eight stations that it operates at Wal-Mart Stores and at about 380 more that it runs as part of its Sam's Clubs division.
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Re: Corn - Investment Advice
Old 08-09-2006, 12:38 PM   #11
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Re: Corn - Investment Advice

I've never seen E85 for sale, but every gas pump I pull up to has a sticker on it that says "this gasoline contains 10% ethanol."
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Re: Corn - Investment Advice
Old 08-09-2006, 02:18 PM   #12
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Re: Corn - Investment Advice

There is a federal law requiring 10% ethanol in gasoline as a giveaway to the ADMs and Cargills of the world. Here in California we tried to get exempted after testing revealed greater pollution and less fuel efficiency, but the Feds aren't ones to confuse the relative importance of public health and profits for their campaign contributors.

edit to correct spelling
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Re: Corn - Investment Advice
Old 08-09-2006, 02:28 PM   #13
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Re: Corn - Investment Advice

Quote:
Originally Posted by dylar
There is a federal law requiring 10% ethanol in gasoline as a giveaway to the ADMs and Cargills of the world. Here in California we tried to get exempted after testing revealed grater pollution and less fuel efficiency, but the Feds aren't ones to confuse the relative importance of public health and profits for their campaign contributors.
Than MTBE? Got a link to that study?
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Re: Corn - Investment Advice
Old 08-10-2006, 02:36 PM   #14
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Re: Corn - Investment Advice

Quote:
Than MTBE? Got a link to that study?
"Emissions increased on all 10 vehicle fuel systems studied when ethanol replaced the MTBE in
the test gasolines. The average permeation emissions with a 5.7 volume % ethanol gasoline
were 1.40 grams/day higher than permeation emissions with the MTBE gasoline and 1.10
grams/day higher than permeation emissions with a non-oxygenated gasoline. This is
equivalent to an average permeation emissions increase of 65% with a change from the MTBE
gasoline to the ethanol gasoline and 45% with a change from the non-oxygenated gasoline to
the ethanol gasoline."

Link
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Re: Corn - Investment Advice
Old 08-10-2006, 03:36 PM   #15
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Re: Corn - Investment Advice

what is MTBE made from...
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Re: Corn - Investment Advice
Old 08-10-2006, 03:45 PM   #16
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Re: Corn - Investment Advice

Made from methanol, which is chiefly sourced from natural gas.
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Re: Corn - Investment Advice
Old 08-10-2006, 03:46 PM   #17
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Re: Corn - Investment Advice

Quote:
Originally Posted by IntoTheMystic
what is MTBE made from...
Methyl tert-butyl ether (MTBE) is a chemical compound that is manufactured by the chemical reaction of methanol and isobutylene.
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Re: Corn - Investment Advice
Old 08-10-2006, 03:53 PM   #18
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Re: Corn - Investment Advice

Quote:
Originally Posted by MasterBlaster
Methyl tert-butyl ether (MTBE) is a chemical compound that is manufactured by the chemical reaction of methanol and isobutylene.
not to belabor this and I thank you for your patience and knowledge on this MasterBlaster, but where do babiesmethanol and isobutylene come from...
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Re: Corn - Investment Advice
Old 08-10-2006, 03:56 PM   #19
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Re: Corn - Investment Advice

Quote:
Originally Posted by IntoTheMystic
not to belabor this and I thank you for your patience and knowledge on this MasterBlaster, but where do babiesmethanol and isobutylene come from...
From the Lord God, Creator of all that is and was and ever will be.

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Re: Corn - Investment Advice
Old 08-10-2006, 04:00 PM   #20
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Re: Corn - Investment Advice

Quote:
Originally Posted by IntoTheMystic
not to belabor this and I thank you for your patience and knowledge on this MasterBlaster, but where do babiesmethanol and isobutylene come from...
Manufacture of Methanol
Methanol is made by a method different from that used in the preparation of the other alcohol. The naphtha fraction from the distillation of crude petroleum, is used as a raw material for the manufacture of methanol. When naphtha is reacted with a high steam ratio, under pressure and at high temperature, synthesis gas of low methane content is obtained. Most of the carbon from the naphtha is converted to carbon monoxide and carbon dioxide which can be removed from the gaseous mixture to leave hydrogen of high purity.


1000 degC
C + H2O ==> CO + H2
Carbon Hydrogen
Monoxide

When a mixture of hydrogen and carbon monoxide in the ratio 2:1 is passed over a catalyst (e.g. a mixture of zinc oxide and chromium oxide) under high pressure and at high temperature, methanol is formed.



400 degC
CO + 2H2 ==> CH3OH
Methanol



Manufacture of Isobutylene

A stream containing from 8 to 15% by weight of isobutylene and 15 to 50% isobutane can be produced from methanol by using silicalite (S-115) impregnated with oxides of thorium, zirconium, titanium, or manganese.^The isobutylene can be recovered from this stream and used in the manufacture of methyl-t-butylether, butyl rubber, polybutenes, alkylate, maleic anhydride-isobutylene copolymer, or synthesis of 2,5-dimethylhexadiene, an intermediate in the manufacture of pyrethroid insecticides.^The isobutane can be dehydrogenated to produce isobutylene.^The majority of isobutylene is obtained from the C/sub 4/ cuts from steam or catalytic crackers or from field butanes.^Steam crackers produce a stream with 18-32% isobutylene while catalytic crackers produce a stream with 10-20%
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