I received a question this morning from a reporter and, with the market pressing ever upward, I thought you might find the answer interesting.
Question:“I’ve got a question about corn prices. I’m trying to find out what number from 2008 is generally regarded as the all-time ‘record’ corn price. I want to be ready in case the market tops that in the days or weeks ahead. One guy I talked with thought it was $8.01, probably sometime in June 2008. But if you know what that record is, or at least what most in the grain trading business consider to be the all-time high …let me know. Thanks!”
Answer: I commend you for your preparation. The highest nearby futures price on corn occurred in June of 2008. The Jul’08 contract traded as high as $7.625/bu on June 27, 2008. The highest closing price for a nearby contract was achieved on the same day, at $7.5475/bu. The timing of your question is good because the May’11 corn contract (the current nearby contract) has traded as high as $7.575 today, a mere 5 cents from the all-time high. The highest corn futures price ever recorded was the Jul’09 contract, which traded as high as $8.215/bu on June 26, 2008.
One of the greatest differences between the 2008 bull market and the current bull market can be found in the carrying charges. Even as the corn market was reaching new highs in June of 2008, the market was sporting very large carrying charges (this explains how the nearby July contract peaked at $7.625 while the “red” July contract was trading about 60 cents higher). The current corn market is inverted. Red July (the Jul’12 contract) is trading at a 90 cent discount to the Jul’11 contract.
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