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Pro Trader: How to Cash In on This Year’s Cash Crop

Farmers are planting a near record amount of corn this year and Fast Money’s Brian Kelly has a plan to cash in on this cash crop.

Kanundrum Capital’s founder was looking at fertilizer companies Thursday morning in the wake of a US Department of Agriculture report that showed farmers planned to plant more than 92 million acres with corn this year. That amount is the second largest since 1944, and exceeded analyst estimates by about a million acres.

Corn futures traded limit up on the news. The CME group halts corn futures trading once prices rise 30 cents, about 4.5%.

“I am looking at names like Intrepid Potash and Potash ,” said Kanundrum Capital’s Kelly.

The reason Kelly is buying these fertilizer names is because corn, unlike other grains, relies on potash fertilizer. About 60% of potash is used on cornfields, explained Kelly. Soybeans – a crop that farmers say they will cut back on in order to make room for corn – relies more heavily on nitrogen fertilizers.

Fertilizer companies can typically raise prices when farmers are pulling in higher revenues from their crops. Corn futures are up nearly 101% in the past year.

Also, Kelly was watching the cotton futures Thursday morning. Cotton futures were up nearly 2% Thursday on news that China was stockpiling the fiber. Cotton futures were the best performing asset this quarter, rising nearly 37% in the past three months.


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