I'm convinced that anyone interested in the study of corn prices will find the tables below useful. We can often get “analysis paralysis” when looking at markets on a daily basis, particularly when you get to the point where you worry about what makes a market go up or down each day. At that point, you can't see the forest for the trees.
If you're looking for a more simplified approach to marketing corn, let me explain the two tables below.
First, the official marketing year for corn begins Sept. 1 and ends Aug. 31 of the following year. The graphs simply show the month in which the highest price for cash corn occurred and the month of the lowest price, using central Illinois prices.
For example, we haven't yet recorded this year's high and low because the year is not yet complete. As I write this, the highest price of cash corn occurred in September at $2.80 and the low in July at $2.05. History indicates that 25% of the highs have occurred in September and 19% of the lows have occurred in July.
With that description of tables, consider the following:
The cash corn market has never made its lows of the year during March, April, May or June. We're not saying that bottoms can't occur in those months — just that they never have.
The cash corn market has never peaked in either of the months of February or April. They only peaked one time in October, November, December and January and only twice in March or May.
Tops and bottoms in the corn market have high odds of either coming early in the marketing season or late in the marketing season.
Normally, if a market peaks early it will bottom late. If it bottoms early it will peak late.
Because most major highs and lows are made just before, during or right after harvest, it's clear that major short-term moves in the corn market are more a result of supply issues than long-term demand.
During years of major moves (either up or down), two years will normally peak together or bottom together prior to harvest. For example, the top of the 1982-83 bull market occurred in August, and the next crop year's peak occurred in September (back to back). The same is going to occur again with the 2001-02 marketing peak in August and this year's peak in September.
Actually, we don't recommend this. To be a good marketer history shows you need to study the markets continuously. But these charts clearly show that if you narrow your marketing focus to only four months of the year — July, August, September and October — you've captured 85% of the marketing year lows and 66% of the marketing year highs since 1970.
Odds are high that the corn market makes major lows or highs from June through October.
Still, that doesn't remove the emotional handicaps that many of us have in making decisions. Why? When the market is making its top, news is bullish and the majority of people in the coffee shop are as well. The opposite is true of bottoms.
To go against the majority opinion, even when the odds are in your favor, is often difficult. That said, however, this coming year looks like it should show corn prices will make their lows early.
Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit www.brockreport.com.