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Dennis Gartman: Forget Rain, This Could Send Corn Tumbling

Monday, 23 Jul 2012 | 6:01 PM ET

The price of corn has surged in recent weeks but there’s a potential catalyst that could erase gains and then some.

That's according to esteemed commodities investor Dennis Gartman, who is also a CNBC Contributor.

Although he doesn’t see the catalyst coming into the market right away, he tells us, it's inevitable and when it does come, it should send prices tumbling.

Gartman is talking about a meaningful change in the government mandate on ethanol.

“But that’s a political issue and this is an election year,” he explains. “Therefore I don't see it happening before the election.

Nonetheless, Gartman is convinced eventually the mandate will change.

“They need to do it. There is no reason to put the meager amounts of corn that we’re getting into gas tanks. I wouldn’t be surprised if it happens the very next day, after the election.”

And Gartman says when that day comes, “it will be manifestly bearish for corn.”

Gartman: No Respite in Sight for Grains
Discussing the state of the Midwest drought, and crop conditions, with Dennis Gartman of The Gartman Letter. The Fast Money traders share their stock picks.

But in the near-term Gartman doesn’t see the relatively bullish environment changing all that much.

“The crop has been absolutely decimated. We had expected 14.7 billion bushels and now we're looking at 12.2. It will be months before the market discounts this crop and thinks about ethanol or even the next crop.”

What's the trade?

“Corn should sell-off a little but down about 25 cents I’d get interested. Even a good deal of rain now isn’t going to change anything, in the near-term.”

Posted by CNBC's Lee Brodie

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Trader disclosure: On July 23, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long BTU; Stephen Weiss is long QCOM; Stephen Weiss is long VZ; Stephen Weiss is long T; Stephen Weiss is long PCAR; Stephen Weiss is short X; Stephen Weiss is short JCP; Josh Brown is long JPM; Josh Brown is long WFC; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLU; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long SBUX; Josh Brown is long MSFT; Josh Brown is long F; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Mike Murphy is long SBUX; Mike Murphy is long FB; Mike Murphy is long URI; Mike Murphy is long BTU; Mike Murphy is long TOL; Mike Murphy is long LEN; Mike Murphy is long PHM; Mike Murphy is short XHB

For Dennis Gartman
Dennis Gartman is short CORN

For Barry Bannister
Nothing to Disclose

For Larry Mcdonald
Nothing to Disclose

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