Price fireworks?

March 12, 2009 07:00 PM
 

Linda Smith, Top Producer Executive Editor

If you are betting on catching summer weather rallies, don't bet on them post–July 4, cautions Kevin McNew, president of Cash Grain Bids. "On average, over the past 10-year and 20-year periods, new-crop corn and soybeans decline after July 4 by 30¢ to 40¢/bu. So get your hedges on before you watch the fireworks!”

He also recommends focusing on futures or options in the spring/summer and staying away from cash contracts. Cash Grain Bids compared new-crop basis quotes from selected elevators in Iowa and Illinois for the past 10 years earlier in the season versus harvest. It found that corn basis is 8¢ weaker and soybeans are 16¢ weaker in July than at harvest.

"So while you may hit the seasonal high for futures in early summer, chances are this is the worst time to lock in basis,” McNew says. "Separating your transactions will help you better hit the peaks of these two distinct trends.” 


 
You can e-mail Linda Smith at lsmith@farmjournal.com.

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