Corn market history

By Jon Scheve, Superior Feed Ingredients, LLC

The world continues to watch the development of the coronavirus. Many are wondering if it will delay the Phase One deal or impact demand in China or other parts of the world. On a positive note, basis values among end users throughout the U.S. are staying firm, and in many cases are increasing for both corn and beans.

There are so many variables impacting the market that no two marketing years are ever the same. Weather arguably has the biggest impact on the market, and it can’t be forecasted accurately more than two weeks out. So, it’s impossible for anyone to correctly predict the market consistently.

Despite so much uncertainty, farmers still need to make grain marketing decisions every day. And while nothing is ever guaranteed, looking at historical trends can provide some insight on averages and tendencies that can help guide decision-making.

Below are some historical values for December corn futures over the past 3 decades.

  • Around 75% of the last 30 years has seen the December corn high occur between March 1 and August 31.
  • 10% of the highs in those 30 years were in August. Two of those highs were the 2011 and 2012 drought years while the 3rd was in 1991.
  • In the last 6 years, the December corn high occurred between May 15 and July 15. Also, in those same 6 years, corn traded below $3.90 in the winter or spring before rallying.
  • For the past 13 years, December corn has traded above $4.15 futures at some point during the year. Corn has exceeded $4.25 in 12 of the past 13 years with 2017 being the only year that $4.25 wasn’t achieved.
  • Nearly 75% of the last 30 years has seen December corn’s value on May 1 as higher than what it was later in the year on Oct. 1.
  • In the last 30 years December corn’s high has never happened in February or October.
  • In nearly 75% of the last 17 years, the crop insurance guaranteed price in February was higher than in October. I find this particularly interesting because the insurance price is figured by taking the average daily price of each of those months.
  • Only twice in the last 30 years has December corn’s high occurred in January. One was 2013, which followed 3 drought years while the other was in 2001.

 

I’m optimistic with the upside potential in corn this year even though there is no guarantee any of this will happen. Seeing that the year’s high hasn’t been in February for the last 30 years helps me be more patient in the short-term. It would seem that there is a good chance for upside opportunity of at least 20 to 30 cents in the December corn board over the next 4 to 5 months.

 

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

Trading of futures, options, swaps and other derivatives is risky and is not suitable for all persons. All of these investment products are leveraged, and you can lose more than your initial deposit. Each investment product is offered only to and from jurisdictions where solicitation and sale are lawful, and in accordance with applicable laws and regulations in such jurisdiction. The information provided here should not be relied upon as a substitute for independent research before making your investment decisions. Superior Feed Ingredients, LLC is merely providing this information for your general information and the information does not take into account any particular individual’s investment objectives, financial situation, or needs. All investors should obtain advice based on their unique situation before making any investment decision. The contents of this communication and any attachments are for informational purposes only and under no circumstances should they be construed as an offer to buy or sell, or a solicitation to buy or sell any future, option, swap or other derivative. The sources for the information and any opinions in this communication are believed to be reliable, but Superior Feed Ingredients, LLC does not warrant or guarantee the accuracy of such information or opinions. Superior Feed Ingredients, LLC and its principals and employees may take positions different from any positions described in this communication. Past results are not necessarily indicative of future results.

 

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