Resource expert: The bear market nobody is talking about
From Matt Badiali, Editor, Stansberry Resource Report:
It’s useful. It’s food. It’s fuel. It’s used to make plastics, which can turn into a ton of useful products.
And it keeps getting cheaper.
Plus, it just entered the fourth year of a bear market. But that’s giving investors an opportunity today. Let me explain…
Take a look at the chart below, which shows the price of a group of corn futures…
Corn prices recently hit their lowest level in 10 years, down more than 60% from their 2012 highs.
The problem is that corn farmers are getting too efficient. Over the last four years, corn acreage has fallen 9%. But the corn crop increased 36% over the same time frame – from 10 billion bushels to 13.6 billion bushels.
As a result, prices keep falling. That’s good for consumers and farmers who raise poultry, beef, and pork.
But food makers are also making a killing. Companies like Tyson Foods (TSN) and PepsiCo (PEP) use corn to make everything from sweeteners to alcohol. Nearly 500 million bushels of corn were used last year to make high fructose corn syrup. Other sweeteners consumed another 300 million bushels of corn in 2015.
While corn prices have fallen steadily since 2012, Tyson Foods shares are up from less than $15 per share to more than $75 over the same period – a 400% gain. PepsiCo – which also owns snack company Frito-Lay – is up more than 70% over the same period.
If corn prices continue to stay cheap or fall even further from here, shares of both Tyson and PepsiCo will move higher.
But corn is a cyclical commodity, just like oil or gold. All it will take is a drought or some other problem and we could see corn prices rocket higher. In that case, the Teucrium Corn Fund (CORN) will be a profitable speculation.
We’re keeping a close eye on corn prices… I suggest you do the same.