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UBS Global AG commodities strategist Wayne Gordon argues rain in the Midwest now is too little too late for corn and soybeans.
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OK -- six -- is headed straight through the drought stricken midwest but at this point rainfall too little too late for corn insulating crops that is the question.
Wayne Gordon commodity strategist at UBS joins me now to weigh in so there was a lot of hope that.
Eyes it obviously causing all of this rain and flooding damage the pictures are horrible -- that one good part of it would be that it would move north and release some of these drought stricken areas and save the corn and soybean.
Crops would -- think.
Look the reality uses -- into negatives I'm in an actual effect rainfall now no one of the -- Iranians is indicative.
Because these comes a study and prepare -- really entitlement Palestine a good draw -- to actually get it get what is actually out there.
What I guess you don't like the like the previous.
Segments.
You know Mona Lisa -- proxy issue is -- noted he just amend farmers seem to be -- But also it's gonna start to feed into the household budgets of normal Americans.
And also it's feeding into the household budgets of the Chinese.
I'm so you and the politics around ex I'm because it's an all goes to the cost of beef because the cost pool so it's all in -- adopting this whole situation.
So you think he's record high prices that we're seeing -- for corn and soybeans will remain elevated and not only that.
The wholesalers if you will are going to have to pass those increases on to -- -- the grocery store.
Indeed look the bottom monies we need to Lehman team on of these commodities because we just a population while globally if exploding -- -- -- -- -- that UB -- -- population's expanding that is true.
-- but also the dots and -- the changing of the same time so the reality -- that we have a state change and pace of what people are demanding a Willis how much they won't.
And on the other side of -- Food for fuel that that to -- which is now.
Quite in Argentine in the bleeding cool.
Situation as we move into the election so you bought a monies we need to limit the -- which -- prices need to stay elevated.
And these prices will start to see -- -- to people's budgets as we get towards Christmas so at the moment.
Pretzel so because when you have a drought you need to could I -- still today at least -- prices come down initially.
It didn't want to be liquidated that launched -- could rebuke those -- The only way you do that is to -- more support to encourage Thomas to XP in the pulpit.
Can EPA -- -- being here and get rid of those ethanol requirements -- requirements of gasoline to like free yet some of this corn whatever is available to use it for food will that alleviate some of the best.
And look didn't do you completely frank what struck me if -- -- -- to right now with the process gasoline after an SO up.
Yet and gasoline is not connected to the -- trust.
And so as a result of gasoline prices remain high people continue to blamed if and only to fuel.
So let me get -- quick comment here on some of these commodities related.
Stocks Tyson Foods Smithfield Foods Sanderson Farms and to stay short on all of.
-- look well I've been playing his strategy for the last a couple of months so being.
Who long the commodity short the equity.
What I mean by that is short those people who have those commodities such as corn soybeans and so -- as imports into the business.
That means the toxins to -- fields and so forth.
I'm you can't be selective within those stocks -- -- is performed itself.
Then -- -- -- -- as well as Tyson but nonetheless I would still be trying that strategy being short those stocks and the you know group to -- that strategy -- As you go into Q1 next year as we expect corn production to recover in the United States.
Crisis to come down by next to sit there waiting court some fascinating information thank you for joining us constantly hit it thank.
