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Corn is an annually
produced commodity, planted in the spring and harvested in the late fall.
The United States is the world’s largest producer of Corn, accounting for
over 40% of world production. Like other annually produced commodities,
prices reflect not only current supply and demand, but also future prospects
as well. As such, when the crop is at risk prices tend to rise. The
critical stages of development (planting, pollination, and harvest) are as
such the strongest periods for Corn futures.
* Past performance is not
necessarily indicative of future results. See disclaimer on Page 2 for
further details.
Corn planting
typically begins in mid to late April. The months prior to planting tend
towards strength, with prices typically rallying. As planting begins, the
market sighs in collective relief about increasing likelihood of future
supply, and prices break. 16 times during the 1987 to 2005 period, July
Corn futures have declined in April as planting begins.
The formation of silk
threads at the end of fledgling ears on the corn stalk begin pollination.
Usually mid to late June is the critical pollination period. As such, prior
to pollination, future supply is not well known and the market holds onto
its risk premium in the form of high prices. However, post pollination
prices usually break as future supply becomes more certain. This is evident
by the fact that July is the worst month for Corn futures prices.
Prices usually set
their lows in July or early August and then bounce back slightly in August
before breaking in September in anticipation of harvest. Corn futures have
declined in September 15 times during the 19 year period from 1987 to 2005.
Harvest usually begins in October and runs through November, during which
time prices are typically flat. |
