Investing in Ethanol: Nail Biting USDA Action
By Ian L. Cooper
Today’s USDA planting intentions report will give us a better idea of the acreage shift to corn from soybeans, wheat, cotton and hay. It could also show us that ethanol demand is so great that a historic shifting to corn is greatly needed to meet demand, therefore forcing the price of corn even lower. That, itself, should help companies like Pacific Ethanol (PEIX). Lower corn prices would lead to better company margins. Corn Products International (CPO) could be poised for nice upside, too.
According to Commodity Insight, if according to the report, “the shift into corn is less than 8 million acres it will be viewed as bullish the market projecting $5 a bushel in the not too so distant future. If the shift into corn acreage is 12 acres or more, it will be viewed as bearish and corn prices should head lower. But here is a rub. Most of the acreage will come from and at the expense of soybeans. Thus, the more acres planted for corn, the more bullish it is for soybeans. Or, vice versa.”
Take care,
Ian L. Cooper, Editor, Early Alert Trader
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