Joe Victor is a Business Development Specialist with Minneapolis Grain Exchange, Inc., where he monitors cash grain activity and cash grain opportunities. He provides marketing advice through this blog.
Apr 21, 2009
Allendale Inc suggest if 2009 corn plantings emulate recent five year history, it is the next four week time frame when as much as 75% of the crop may be planted. As noted in the graphs linked
to this article, over the most recent five years, nearly 50% of the corn plantings typically occur at the end of April and first ten days of May.
However if 2009 corn plantings decide to follow the 2008 pattern, then we are likely to see a one week lag from the traditional planting pace. What is most surprising to view is the rapidness of planting within the two week period of time regardless of the delay or traditional pace.
The question which may present itself is given the time of year when corn planting is taking place, what influence if any, might it have on corn futures action? Allendale researched as far back as 1996 and discovered some notable results.
The specific question we asked is what happens to corn futures from the monthly closing price for April, to the closing price for the month of June? Dating back to 1996, 38% of the time, corn futures have risen with 62% of the time futures eroding. The range for those years when prices increased was 1% (1998) to a high of 21% (2008) with an average price increase of 11%. If we were to use a present day (04/21/09 price of $3.83/bushel as an example, price may finish at $3.87 low end range to as high as $4.63 with an average of $4.25 at the close of June.
Addressing the 62% of the time when prices erode
over the May-June timeframe, the smallest decrease was 1% (2006 & 1999) and largest decent of 19% (2004) with an average price decrease of 8.6%. Using the same present day price of $3.83/bushel as an example, price may finish $3.79 to as low as $3.10 with an average of $3.50.
Allendale Inc advises to be extremely alert over the weeks of 4/27 through 5/11 as history has taught us this is when the majority of the corn crop is anticipated to be planted and most likely have the greatest influence on corn prices. Odds suggest a price decline during the time period and most likely to influence both old and new crop prices. Allendale Inc highly recommends to immediately put into action a box option strategy to help manage risk. Call 800 262 7538
to take action for your specific needs. ….Joe Victor
The thoughts expressed and the basic data from which they are drawn are believed to be reliable but cannot be guaranteed. Any opinions expressed herein are subject to change without notice. Hypothetical or simulated performance results have certain inherent limitations. Simulated results do not represent actual trading. Simulated trading programs are subject to the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. Commodity trading may not be suitable for recipients of this publication. This is not a solicitation of the purchase or sale of any commodities. Those acting on this information are responsible for their own actions. Any republication, or other use of this information and thoughts expressed herein without the written permission of Allendale, Inc., is strictly prohibited. Allendale Inc. c2009