The year 2008 should be an interesting one on the futures market, as usual. Oil future prices are at an all time high and corn future prices are equally pumped up. The big question is, "will oil future prices stay this high and go even higher?" "Will the demand for corn continue and the corn future prices escalate exponentially over 2008?" Let's take a look at both and then draw our analysis and conclusion.
Oil Future Prices: As of the writing of this article crude oil has meandered between $90 - $100. Is it really reasonable to assume that this can continue to go higher? Will Americans pay this much for it? Or will the government step in and use controls (IE: oil reserves, boycott, stiff armed approaches to OPEC countries) to stabilize and perhaps reduce the cost of crude? These are valid questions and just the start of inquiry if we are to determine if oil future prices will head up over 2008. I strongly believe that oil has peaked and I think we will stabilize at the $80 range. This is a range so it is not exact but for several reasons I do not believe oil is a buy for the 2008. My best advice is to stay away. Now let's look at corn future prices.
Corn Future Prices: Don't listen to what the so-called experts are saying about Ethanol, it is alive and well and the demand will dramatically increase over 2008. Corn future prices are going way up in 2008. Buy, buy buy. It is interesting how the correlation between oil future prices and corn future prices are diametrically opposed. As oil future prices increase the general population becomes increasingly aware of the need for crude oil alternatives and as a result Ethanol gets a public opinion boost. This of course translates into demand as the corn future prices rise, just as they are going to do in 2008.
This has been my opinion, I recommend that you search professional advice and perform due diligence before trading on the futures market.
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Steve Marhelper has been a successful, active trader for years and has been involved in all forms of investments to include futures, forex, stocks, real estate and others.
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