US Corn investment

[lemonlenny]

kia: ohhhhhhhh. ic.... maybe it can be on margin. so if it goes up even +10% in six months, i'll make a huge killing. just my thought. i'll ask her if that is what she is thinking

[TBJ]

Be careful when using margin. Don't leverage yourself too much.

Just came across the article last night. First time I have ever seen corn in the spotlight. This was on the Yahoo Finance main page.

Less Corn Could Mean Higher Food Prices: Financial News - Yahoo! Finance

Lots of favorable conditions that are supporting corn price levels at the moment. Supply is getting hit by farmers planting soybeans instead of the usual corn. Also, farmers in Argentina have been on strike, which is adding on some pressure.

This might not be enough to justify another 70% runup in price, if you were to buy now. A lot of this information is already factored into the current price. You might see less reliance on corn, as demand for substitutes grows. In that case with falling demand and falling supply, you won't really see the price move that much in either direction.

[lemonlenny]

tbj: hello mate. it is corn on the chicago stock exchange. cbot. 5000 bushels per contract. the effective gearing is around 11 fold. i.e. if the price of corn goes up around +10%, (50+ usc at this point). you will double your money approximately. i think conscensus is that the price will go up. but the worry is what if it dips at some point b4 spiking up? the margin call is 80%. so basically, if the price of corn dips even just a bit, like even -3%, or like -15 usc, you gotta add money. so u definately need a buffer- unless you expect it to never dip from the moment u get in.....

i reckon a 50 usc buffer should be enough. although i would be mad as hell, if it had to sink that much b4 going back up.... i am seriously considering biting the bullet and giving myself a 25 usc buffer, and just biting the bullet to see if it can go up like +5% or so in 2 months without that much of drawback.... but it's true, it would be like gambling.

the only way i can see it being a sure win is if you put like 10% of your total worth in it, so you would have a limitless buffer..... but there's not a lot of profit to be made that way.

[Crocodile]

Sorry, but it sounds like you are heading for trouble. You really have no idea on the consequences of your actions (judging by the words and phrases you are using) - you are looking at it way too positively.

Can you cover the margin call if it comes in? Margin lending are ok in a bull market, but in a bear (or unstable) market, it spells trouble. I would not take out a margin loan on anything that wasn't blue-chip. Commodities that can fluctuate are no good for margin loans.

You might as well just walk in to the Wynn and punt the money on red or black. You will know the outcome straight away.

If you want a fast buck, stick with the casino. If you want to invest money, look elsewhere. Your number one objective is should be not to lose money.

[climber07]

Good luck with that corn investment...although as you surely want to get separated from your money by heading into a market that you have no freaking idea about, I would just suggest hedging your bet with some weather derivatives (just in case that cold/wet winter doesn't hurt the supply as much as everyone thinks...) I'm sure my old buddies at the merc and CBOT would appreciate those extra premiums


By the way....ever seen the film Trading Places??

[KnowItAll]

Lenny - here's one for you....

Fuel Choices, Food Crises and Finger-Pointing - New York Times

[taihunggao]

By the way....ever seen the film Trading Places??

I see your Trading Places and raise you Boiler Room. although Jamie Lee Curtis never got her tits out in Boiler Room....and it wasn't about commodity trading....

Lemonlenny: The sort of money you're talking about, you deserve better service than you describe. Some quality IFAs I know would spend between 4-8 hours getting to know you and explaining the markets they're suggesting for you.
/Rant/ it's totally irresponsible (and illegal) for a broker to be pushing any kind of futures on someone that doesn't understand them. And when you say "potential" broker, makes me think this is cold calling. It's malpractice and when people get burnt, it shames Hong Kong's financial professionals. Call the SFC with this guy's license number and complain. /end rant/

Be Bulleh Be Bulleh Be Bulleh Hah!