Posted by: usset001 | June 30, 2010

A bold prediction for July: December corn futures will change!

One of the oldest saws in the grain industry is “July makes the corn crop.” July starts tomorrow and I want to do something that I normally avoid; make a bold prediction. Brace yourself!

The price of December corn futures will change by 30 cents per bushel or more from the first day to the last day of July.

And you are wondering, “Will prices be 30 cents higher, or lower?” To which I reply, “Correct – prices will be 30 cents (or more) higher or lower.”

July is the most volatile month for corn price changes because (as I noted earlier) July makes the corn crop. Over the past two decades, the price of new crop corn futures has declined in 15 of 20 years, and the average decline was 8% (8% of $3.70 corn is about 30 cents per bushel). December corn futures increased in 5 of 15 years and the average increase was 9% (9% of $3.70 corn is more than 30 cents per bushel).

Look for big price changes in July – I’m just not sure which direction. If you’re not certain of my point, refer to the month of June for guidance. December corn futures enjoyed a 40 cent rally, then a 40 cent bust, all in a little more than two weeks.

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