Information provided by Rich Nelson, Allendale.
Scott Donarski asked "…what if the US dollar falls to 72. What does that mean for corn prices?"
Here's a list of how crude, corn, and the dollar have been correlated each quarter. A POSITIVE correlation means they both go up or down together. A NEGATIVE correlation means they move opposite. A chart of those correlations has been attached.
I cherrypicked the quarters which worked and will assume the US dollar has a strong negative correlation (-73%). This means, if the US dollar falls 10% then corn prices should rise 7.3%. A fall in the dollar to 72 would imply a rise in December corn to 418. A retest of the 2008 lows (70.805) would equal corn at 423.
(click to enlarge)
- DECEMBER 2009