The Hindsight On Corn
Oct 07, 2022
By Cindy Warner, Grain Originator
(Charts courtesy of StoneX)
You’ve heard the saying, “Hindsight is 20/20” right? And truly it is. Though hindsight isn’t 100% accurate when it comes to the future, your chances of repeating past mistakes are less likely than before they happened.
The same can be said for grain marketing.
I know, I know, you can’t market hindsight, right?
Well, actually…yeah, you can.
Thanks to all those smart people in those fancy offices, we can chart historical pricing to see when the best time to price grain is likely to be.
This 5-year and 10-year December corn seasonality chart shows that on average Mid-May to July are generally the best months to price corn. Why? Planting is complete, acres are usually realized, carryout gets tighter, corn conditions are being seen, and the market is digesting the June Quarterly Stocks Report. With all those fundamentals being tossed at the market at the same time, volatility ensues. Volatility can be good for farmer pricing, especially on days with upside, and pricing early (and at a margin) helps to mitigate downside risk.
(click for larger image)
In addition, the percentage of days to lock in a decent margin on your corn are few and far between. So watching market upside, knowing historical seasonality, and listening to fundamentals that drive that market are all key to pricing your corn early, and often.
Now, don’t get me wrong, there are outlier years where the price will be the highest at harvest (2012 and 2020 for recent recollection), but roughly 8 out of every 10 years harvest is not the time to market your corn, while May-July is.
Easier said than done, right? So many factors play into pricing your crop like inputs and costs, weather patterns, historical yield, irrigation vs dryland, and market fundamentals. Those reasons are why it is so important to discuss pricing strategy with your originator: they have the scoop on the market, you have the scoop on your break even.
Say no to mediocre pricing and use hindsight to market the future.
(Charts courtesy of StoneX)
You’ve heard the saying, “Hindsight is 20/20” right? And truly it is. Though hindsight isn’t 100% accurate when it comes to the future, your chances of repeating past mistakes are less likely than before they happened.
The same can be said for grain marketing.
I know, I know, you can’t market hindsight, right?
Well, actually…yeah, you can.
Thanks to all those smart people in those fancy offices, we can chart historical pricing to see when the best time to price grain is likely to be.
This 5-year and 10-year December corn seasonality chart shows that on average Mid-May to July are generally the best months to price corn. Why? Planting is complete, acres are usually realized, carryout gets tighter, corn conditions are being seen, and the market is digesting the June Quarterly Stocks Report. With all those fundamentals being tossed at the market at the same time, volatility ensues. Volatility can be good for farmer pricing, especially on days with upside, and pricing early (and at a margin) helps to mitigate downside risk.
(click for larger image)
 |
In addition, the percentage of days to lock in a decent margin on your corn are few and far between. So watching market upside, knowing historical seasonality, and listening to fundamentals that drive that market are all key to pricing your corn early, and often.
 |
 |
Now, don’t get me wrong, there are outlier years where the price will be the highest at harvest (2012 and 2020 for recent recollection), but roughly 8 out of every 10 years harvest is not the time to market your corn, while May-July is.
Easier said than done, right? So many factors play into pricing your crop like inputs and costs, weather patterns, historical yield, irrigation vs dryland, and market fundamentals. Those reasons are why it is so important to discuss pricing strategy with your originator: they have the scoop on the market, you have the scoop on your break even.
Say no to mediocre pricing and use hindsight to market the future.