Hang onto your corn, because if one analyst is correct, the futures market could test, or push through, the $8 level in 2012.
Darin Newsom, senior analyst at DTN, told a webinar audience Tuesday morning that gold and crude oil will both have their bullish rallies in 2012, but the fundamentals indicate corn "will be the leader of all commodities."
Newsom pointed to the domestic and world ending stocks as one of several indicators that "corn is poised to make an explosive move through the third quarter ... at least until we see start to see the 2012 harvest" and anticipated yields.
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Market fundamentals point to a potential “explosive move” by corn through 2012’s third quarter, making corn the driver of all commodities in 2012.
The other factors set to push the market higher, Newsom said, are the recent re-entry of non-commercials into the market and the South?American drought that threatens corn yields in Argentina, the world's second most exported of corn.
Despite a drop in demand in livestock feed, exports backing off and ethanol's demand on corn stabilizing, it's non-commercials that will pressure the market, Newsom said.
In 2008, non-commercial long contracts totaled 500,000, dropped to 125,000 in 2009, but since has jumped to 600,000 in 2011, equalling 3 billion bushels, a billion more than ethanol uses.
In 2011, outside investments pulled funds out of corn, even as other demands were rising, and the futures price followed the downward trend, Newsom said.
However, with 313,000 new contracts in past several weeks, coupled with the normal market rally trends in late-winter and spring, the market price will go up as endusers look to securing their 2012 supplies.
"It seems (traders) are taking the South American situation into effect," Newsom said.
The U.S. leads the nation with 36 percent of the total world production of corn. China is a distant second at 18 percent.
The U.S. also leads the globe in corn demand - 32 percent - and largest exporter of corn at 44 percent.