The broad pullback in the commodities markets that traders have seen over the last few weeks is not as severe in the corn market, which continues to be a good value, Terry Roggensack of the Hightower Report, told CNBC on Tuesday.
Roggensack, who covers grains and the agriculture markets, told CNBC’s Squawk Box that while there is still broad risk that markets could pull back significantly, “We're seeing commodity markets that have more positive fundamentals looking forward beginning to catch hold.”
Corn should do particularly well because persistent rainstorms and the massive flooding along the Mississippi river could keep inventory low this year, driving up prices, Roggensack said. At this time last year, the U.S. corn market was more than 80% planted, but because of this year’s severe weather, it is only 63% planted right now.
“Indiana is only 29% planted, Ohio only 7% planted so far,” said Roggensack. “We have pretty serious problems there.”
Those planting problems combined with the expected increased consumption of corn and other foods from around the globe suggest that the fundamental outlook for corn will only improve. Traders have reacted by selling their current long positions in corn in anticipation of higher growth levels.
“We've seen 250,000 contracts liquidated over the past month, and the market is at a support area,” said Roggensack. “It's at an area where we're seeing the usage numbers just continue to be strong.”