CIS and the Historic 1996 Corn Market...

Following seven years of prices ranging from $2 to $3 per bushel, the corn industry expected more of the same for the 1995-96 crop year. However, CIS began to question this complacent attitude as early as September 1995. The following excerpts were taken from issues of Price Perceptions during that time period. Just click any number on the chart!
 

   

1. 09/02/95 Commodity Inflation is Back! “Who would have guessed two years ago that the world’s most populated nations (Asia) would experience a labor shortage. What are these millions of higher income workers doing with their new found wealth? You guessed it... They're spending it on food, clothing, and other basic consumer goods... Things that create demand for commodities such as meat, grain, sugar, cotton, and copper.”

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2. 09/16/95 Corn: Severe Price Rationing Ahead! “This season is shaping up as one of the most bullish in history for corn. Justification is now evident to see prices approach the $3.75 to $4.00 level.”

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3. 10/07/95 Price - The Great Equalizer! “Corn prices must become the great equalizer between large animal numbers and inadequate feed supplies. Based on current indications, prices will need to seek near record levels before demand is rationed to available supply.”

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4. 10/21/95 Paying the Piper! “Many grain users refused to pay the price of forward coverage. In months ahead, they will pay the piper as they compete with rapidly growing nations of Asia for dwindling supplies.”

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5. 11/18/95 “All the ingredients are present for a classic demand driven market in corn. We strongly advise our subscribers to utilize intermittent pullbacks over the next few weeks to accumulate long positions.”

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6. 12/02/95 Bull Markets are Not Created Equal! “This year's advance in grains and soybeans exhibit all the characteristics of a realizing bull market. The latter stages of price acceleration has not yet begun. This stage will become the most difficult, but the most profitable, of the entire move.”

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7. 01/06/96 “We expect the corn market to move into an accelerated bullish phase during winter. The shocking process will require new, all time high prices before demand is balanced with restricted supply.”

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8. 01/20/96 “All fundamental data indicates that significantly more demand rationing is needed if we are to avoid shortages and dislocations later in the year. The rationing process cannot be completed with lower prices... We strongly advise utilizing the current setback to initiate new long positions or add to existing positions.”

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9. 02/03/96 Corn: Can We Run Out? “My trading experience during the Seventies led to recognition that demand markets contain three distinct phases... Skepticism, Realization, and Panic. The corn market is still in the skepticism phase.”

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10. 03/23/96 The Well is Running Dry! “Over the past 15 years, merchandisers and users have learned that grain market rallies are short lived and only a fool buys ahead to cover future needs. However, perceptions are beginning to change... Users have tapped the well once too often and they are beginning to find it dry.”

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11. 04/13/96 Corn: Final Stage of Demand Market Now at Hand! “Although prices have reached our long term objective of $4.25 to $4.50, there is not yet sufficient reason to believe the bull market has ended.”

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12. 05/11/96 U.S. to Run Out of Corn! “To avoid running out of corn, livestock and poultry producers must hold a minimal inventory. Corn processors and exporters must also hold a minimal inventory. However, with only a 13 day supply left for all users, someone will be required to do without!”

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13. 06/02/96 Pullbacks into Early June are Buying Opportunities! “Accumulating long positions on pullbacks into early June should prove quite profitable into the summer growing period.”

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14. 06/16/96 “The marketplace is currently focused on potential for a larger crop and reduced demand. We view negative perceptions as a short term phenomenon that should provide an excellent buying opportunity between now and late June.”

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Our research is geared toward long term moves. By analyzing ongoing events as they relate to our forecast, CIS provides traders with a continued flow of information and analysis, helping to maintain the level of confidence required to capitalize on major price moves.
 
 
TRADING IN COMMODITY FUTURES OR OPTIONS INVOLVES SUBSTANTIAL RISK OF LOSS.
PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
July 1996 Corn
©2013 CQG, Inc.
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