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Paragon Investments' Futures File: Corn, Stocks & OJ

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Corn Can’t Pop

Corn prices continued lower this week, dropping underneath $3.50 per bushel for the first time this year after the USDA showed improving corn crop quality on Monday.

The USDA was already projecting an ample 14.2 billion bushel crop, and improving quality could boost the crop size to the second-largest ever. Southern states have begun harvesting this year’s crop and are reporting high yields.

However, many private forecasters fear that the crop is in worse shape in Midwestern states, which could provide a spark to the markets if they are correct.

If there is a harvest shortfall this year, it could be exacerbated by the currently low prices. Demand for corn has been climbing as buyers scoop up the grain at a bargain price, and shipments to foreign buyers have risen 23% over the previous year.

Stock Markets Drop on Trumped up Fears

Stocks tumbled this week as a growing rift between President Trump and Fortune 500 CEOs spooked Wall Street. Multiple CEOs resigned from advisory panels, citing concerns about the President’s response to the violence in Charlottesville, which then prompted the President to dissolve the councils altogether.

This discord unnerved investors who had been hoping that business leaders and President Trump would work together on tax reform, boosting the economy and stocks.

Instead, after the impasse in Congress over health care and recent breaks with Wall Street, many fear that a comprehensive economic plan is looking like a long-shot, which helped drag S&P 500 futures contracts to a one-month low on Friday.

Markets were further troubled by terrorist attacks in Barcelona and a slew of disappointing earnings from corporations.

Meanwhile, gold prices pushed over $1300 an ounce, a nine-month high while U.S. treasury bond futures reached a six-week high. Both “safe-haven” assets typically gain value when investors are scared out of stocks.

Help on the Way for Florida’s Oranges

Florida’s orange groves have been devastated in recent years by a disease known as citrus greening, a bacterial infection spread by insects. The disease is ravaging citrus groves, cutting the Sunshine State’s production by nearly 50% over the last decade.

To combat the disease, Florida’s Citrus Research and Development Foundation has solicited the help of the German chemical company Bayer AG. They hope to have test solutions ready within a few years.

This could help rescue Florida’s growers, who are suffering from crop losses and relatively low prices. Frozen concentrated orange juice futures traded Friday for $1.40 per pound, near a one-year low.

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About the author

With a degree in Grain Science / Management from Kansas State University, Mr. Haverkamp has worked directly with and for several corporations in research, logistics, and origination of commodity products. Among these are Continental Grain, Kansas Wheat Commission, National Livestock Association, Kice Industries, and Land 'O Lakes. Mr. Haverkamp is a regular guest analyst on both radio and television programs throughout the Midwest and also provides fundamental and technical research for Bloomberg, DTN, Dow Jones, The Wall St. Journal, CNN and CNBC as well as several other local and regional news syndicates. Mr. Haverkamp sat on the board of directors for the NIBA (National Introducing Brokers Association) in Chicago for five years and on the National Futures Association's nominating committee for one year. Mr. Haverkamp began trading in 1987 and founded Paragon Investments in 1996. 

  Mr. Haverkamp continues to provide consulting services for individual investors, livestock operations, grain processors, and individual producers as well as holding the title of CEO for Paragon.

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