For investors, commodities come in an obvious pecking order...
Energy markets sit at the top of the heap. Oil and natural gas make headlines even when they aren't making exceptional moves.
Similarly, folks are almost always ready to talk about gold and precious metals – and if their prices are soaring or crashing, everyone will know about it.
On the opposite end of the spectrum, plenty of commodities go unnoticed. Most investors can go their whole lives not paying any attention to them. And one commodity that's firmly on that list is corn.
I doubt you've thought much about investing in corn either. But it's time to break that habit today.
That's because the price of corn has crashed. Sentiment toward this commodity has reached a rare level. And it could lead to big gains.
Let me explain...
Like many investments, corn has been on a roller-coaster ride in recent years...
The commodity's price nearly tripled from its mid-2020 pandemic low to early 2022. Since then, though, prices have collapsed... dropping by nearly 50%.
Investors who do follow corn tend to react in wild ways. They get too excited on the way up – and too worried on the way down. And that bearishness is taking hold in the recent decline.
We can see how speculators are feeling by looking at the Commitment of Traders ("COT") report for corn. It's a weekly report that shows what futures traders are doing with their money.
With the recent price decline, these folks have become darn bearish on corn. Take a look...
Sentiment crashed right alongside prices. And the COT recently hit the most bearish level we've seen since July 2020 – when a massive rally was starting to kick off.
Not only that, but the COT is also now below negative 100,000. That happens to be a historically important level.
To see it, I ran the numbers from the past 10 years. I looked at each new instance of when the COT for corn fell below that level. And the returns going forward were impressive...
Corn tends to hold steady over long periods. Its price has increased by less than 1% a year over the past decade.
But like many commodities, it has also seen massive ups and downs along the way. And buying when sentiment looks like it does today would have positioned you for major outperformance.
Similar setups led to 5.1% gains in three months, 5.8% gains in six months, and 9.2% gains over the following year. Plus, the largest of those one-year gains was a spectacular 81% winner.
Sure, corn won't be making investment headlines anytime soon. But at the right times, this commodity can absolutely soar. And according to history, now is one of those times.
If you're interested in betting on a rally, the Teucrium Corn Fund (CORN) is a simple way to make the trade. It shouldn't be a long-term holding for any investor. But if you're looking for a short-term, out-of-the-box idea, it's something to consider right now.
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