All prices in the market are mostly determined by the general feel of the investors. Buying or selling of futures or shares is an inexact thing. Various investors use different approaches and tactics like the demand/supply data or a gut feeling. Buying and trading in shares is often a bet on things that occur in future. This makes sentiment indicators vital but only in the extreme cases. When the sentiments are high, it marks a bad time to try and buy. However, when the sentiment is low then it tells an investor that it is a great time to buy.
For instance in 2008-2009, sentiment towards the stocks was just awful. Investors were afraid or kept off from buying stocks as everyone was terrified of the extremes. However, if anyone had bought the S&P 500 back in those years for a price lower than 800 points, then they would be enjoying a 300% gains currently. Sentiment indicators enable investors know when the fear levels or greed levels become too high. At the moment, the fear level on corn is at an all time high in the last four years. This would perhaps mean that it would be a perfect opportunity and time to speculate on corn.
At the moment, the market hates corn as it has sunk to its lowest point ever since November 2013. The last time corn sunk to this level, it managed to soar by 22% in only six months. The sentiment extreme is what guides an investor on the shares to buy when the price is not at its record low. The real problem will occur if the country experiences a record harvest as more bushels per acre will be available.
A Good Area for Speculation
Heavy crop surprises a market and this is what has led to the price of corn going down when most farmers were hoping that it would rise. A large number of farmers had not sold their corn earlier expecting that come November, it would fetch higher prices. This made a lot of farmers accept any price they got leading to this extreme.
About Matt Badiali
Matt Badiali employs a go-anywhere, hands-on and talk-to-everyone approach to his research and investment prospects. He has traveled to countries around the world like Iraq, Haiti, Singapore, Papua New Guinea, Switzerland, Turkey and Hong Kong. Matt Badiali has visited and interrogated lots of CEOs working in oils wells and mines in a bid to get proper data.
— Matt Badiali (@Matt_B_Guru) November 17, 2017