Posted by: usset001 | March 5, 2013

The corn inverse must be resolved…

Old Crop New Crop Cash Corn Price Inverse…and it may take until mid-September before it happens.

Nearby cash corn prices are $2/bushel higher than new crop bids (Southwestern Minnesota prices). This is an incredibly strong inverse, even higher than the inverse seen in 1995/96 – a year when the ending stocks situation in the U.S. corn market was even tighter than projected for the current crop year.

In 1995/96, the inverse peaked at about $1.50/bushel in mid April and held at high levels through August. Where will the inverse peak this year? How long will the high levels hold?

If you are a holder of old crop corn, you have a big stake in these answers. Eventually this inverse will be resolved – old crop becomes new crop and the premium disappears. You need to be certain that you don’t stay at the party too long.


Responses

  1. […] Three months ago I offered my thoughts on an incredible inverse in the cash corn market. Nearby corn prices were more than $2/bu. higher than new crop bids. Despite a quick downward adjustment (severe crash?) after the March grain stocks report, the inverse of nearby corn prices vs. new crop bids has climbed back above the $2 mark. […]


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