If you live in the middle part of the nation, you already know that 100 degree temperatures have blanketed much of the region. Chicago may have a high of 101 degrees by June 28 and St. Louis may reach 104 the next day, according to the National Weather ServiceAnd those temperatures aren’t only uncomfortable, they could wreak havoc on your portfolio.That’s largely because the heat and lack of rain could turn the corn crop -- well, on its ear!
“We thought the crop was in great shape – what looked like an absolutely huge corn crop is quickly diminishing,” explains strategic investor Dennis Gartman, author of the Gartman Letter.
And a smaller corn crop, in turn, sends ripples across a range of industries because corn is used in products ranging from candy and ice cream to renewable fuels.“For example, "it will certainly cause trouble for cattle producers, for sure,” says strategic investor Dennis Gartman. In turn that would be a problem for meat processors and related stocks.
Charles Neivert, managing director at Dahlman Rose, says higher corn prices sends fertilizer stocks higher. “Ferts trade in tandem with corn prices and a smaller corn crop will send corn prices much higher.”
But before you attempt to game who wins and who loses from higher corn Dennis Gartman says there’s something else you need to know.“These weather related markets can turn on a dime. As soon as it rains the price of corn could come down sharply and investors will scramble to cover,” he says.Gartman tells us that the key date to watch for this trade is Independence Day. The Midwest needs a soaker of consequence by July 4th to keep the corn crop about where it is- without a good soaker the corn crop will drop beneath 14 billion bushels and that’s the game changer.”
Posted by CNBC's Lee Brodie
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Trader disclosure: On June 25, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian is long AAPL; Pete Najarian is long BAC CALLS; Pete Najarian is long INTC; Pete Najarian is long JOYG CALLS; Pete Najarian is long SBUX; Pete Najarian is long FB CALLS AND STOCK; Pete Najarian is long MSFT; Pete Najarian is long MOS; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long M; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Brian Kelly is long BAC; Brian Kelly is long PNC; Brian Kelly is long JPM; Brian Kelly is long WFC; Brian Kelly is long XLU; Brian Kelly is long INTC; Brian Kelly is long IBM; Brian Kelly is long TGT; Iuorio Is Long (HOV); Iuorio Is Short (JPM); Iuorio Is Short (MS); Iuorio Is Short (GS); Iuorio Is Long (C); Iuorio Is Short (PCLN); Nations Is Long (SPY); Nations Is Long Citigroup (C); Nations Is Long Bank Of America (BAC); Nations Is Long JPMorgan (JPM)
For For Charles NeivertDahlman rose & company, llc, and/or its affiliates may have positions in the securities of (agu), (cf), (ipi), (mos), (pot), (rnf), (uan). However, none of those positions equal or exceed 1% of the equity securities outstanding for the subject companies.
For Dennis GartmanGartman Is Long Gold In Euro TermsGartman Is Long Gold In Yen TermsGartman Has A Short Position In Corn
CNBC.com with wires.