That the U.S. top commodity were trading for the highest prices since July 2008 was not a demand deterrent for corn, which also is used for animal feed. The commodity also is used for ethanol as it burns more cleanly.
"Although the USDA left its U.S. corn inventory projections unchanged, we reiterate our expectation for further tightening in the 2010-2011 corn balance on continued strong feed and ethanol demand," according to a Friday report by analysts Damien Courvalin and Allison Nathan of Goldman Sachs.
At 2:15 p.m. on Friday, corn futures were up 1.01 percent, a 0.0775 cent increase to $7.74 per bushel.
"Further reported declines in corn stocks are not politically desirable as rising corn prices would undercut public support for subsidizing ethanol, which is the core element of the White House's biofuels policy," according to a Friday report by senior analyst Don Carson of Susquehanna Financial Group. "Grain prices need to rise in order to ration demand."
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.