Corn Bulls Graze On Fund Money
Influx of hedge fund dollars big story.
Bryce Knorr
Published: Jun 1, 2009
Summer officially begins today, at least for the weatherman, and prices appear ready to rally. But unlike the stereotypical weather market, the thing that's really hot this year is the flow of fund money. To be sure, planting delays likely are taking the best yields off the table, and acreage is likely to fall, just as demand seems to be firming. But the influx of hedge fund dollars is still the big story for the market, for better or worse.
It's all good right now, but ultimately, livestock producers and other end users may yell uncle from the squeeze of higher feed costs. Consumers in a recovering world economy may be able to afford higher meat prices, but it's important to remember that vast amounts of wealth have effectively gone up in smoke as stock markets and real estate values collapsed. While the amount of fund money entering the market last year was seemingly unlimited, this year there's less to go around. Prudence may also limit investment, at least if money managers learned anything from the financial debacle. That one's still open to debate, of course.
The only thing that seems certain is the prospect for more volatility.
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