While most of the market attention has been on the possibility for increased soybean price volatility because of the Chinese tariffs, analysts agree corn could move higher over the next couple of years. One analyst thinks it could even reach $8 per bu., a level not seen since 2012.
What would it take for corn to return to its glory days after living at $3 per bu.? According to this story from Barron’s, declining output, an ethanol led demand surge in China and the potential for brutal weather could be the recipe for a price surge.
“Eight dollars is very possible,” says Shawn Hackett, author of the Hackett Money Flow Report newsletter in this story, adding that declining supplies will run headlong into increased Chinese demand.
Possible is not a word Andy Shissler of S&W Trading uses with $8 corn. In fact, he can’t see it happening.
“It takes one very, very bad situation to make $8 corn for even a day,” he says. “I don’t see it. It would take another year of stock declines globally to hit a number like that.”
According to Shissler, the kind of drought we saw in 2012 is the kind of threat that takes corn to $8.
“We are far from that market,” he says. “But, $5 or $6 could happen.”
