Dennis Gartman: Bad Corn Crop Will Trigger Shortage of ‘This’

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.

“Live stock producers thought they were looking at $4 corn instead they’re looking at $7 corn. The cost of producing cattle has really gotten egregious. They’re going to have to liquidate herds. As a result, there will probably be a shortage of cattle next year,” Gartman explains.

If you’re a retail investor and find cattle futures a little outside your wheelhouse, trader Josh Brown suggests looking at a long position in the COW ETN. Or he says, consider the CORN ETN.

Posted by CNBC's Lee Brodie

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Trader disclosure: On July 5, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Josh Brown is long XBI; Josh Brown is long JPM; Josh Brown is long COP; Josh Brown is long AAPL; Stephanie Link is long JPM; Stephanie Link is long DD; Stephanie Link is long TJX; Stephanie Link is long DVN; Simon Baker is long AKS; Simon Baker is long GLD; Simon Baker is long WFC; Simon Baker is long JCP; Simon Baker is long GLW

For Jason Raznick
Jason Raznick is long AAPL
Jason Raznick is long MSFT

For Paul Richards
Nothing to Disclose

For Dennis Gartman
Dennis Gartman is long Corn

For Brian White
No part of the compensation received by the analyst principally
responsible for the preparation of this report was, is, or will be directly, or indirectly, related to the specific recommendations or views contained in this research report.

For Dan Greenhaus
Dan Greenhaus is long GLD with wires.