If you’re looking to play the shortage of corn, strategic investors Dennis Gartman says be careful. Not every trade you think should work, will work.
The corn crop in the US is expected to fall dramatically this year, after a terrible heat wave and resulting dry spell hit during a key point in the growing season - when corn begins to tassel. (Click here for more on tasseling)
“It’s amazing what’s happening,” says top commodities investor Dennis Gartman. “We thought the crop was going to be 14.7 billion, now it looks more than 13.5 billion.”
You’d think that should be bearish for cereal makers anad bullish for the fertilizer makers, right?
Not yet. Gartman says be careful about extrapolating too far. “As soon as it rains, the whole dynamic could change,” he says. "And it could change very, very quickly."
However, from current conditions, Gartman does thinks there is one trade to be made. "I think deferred cattle futures are a buy," he says on CNBC's Fast Money Halftime Report.
That’s because Gartman believes the cost of corn feed will go much higher, and it will force live stock producers to slaughter cattle earlier than they otherwise would have.