Posted by: usset001 | June 6, 2013

Revisiting the Inverse in the Corn Market

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.

Old New corn inverse June 2013It is now early June and I am prepared to make a bold prediction: Sometime over the next 90 days, this inverse will be resolved, i.e. “nearby” and “new crop” will morph into one and trade at the same price. When and how will the resolution occur? Will spot prices fall to new crop levels, or will new crop bids rise to the higher nearby levels?

Since 1990, I can find three other years with inverses similar to this year.  My definition of similar is years when nearby cash corn prices reached at least $1/bu. higher than new crop bids, sometime in the year before harvest. These years include 1995/1996, 2010/2011, and 2011/2012.

When and how did the resolution occur in these years?

1995/1996: In terms of severity of inverse and the stocks carryout situation, this year matches up closest with the current year. The inverse was resolved in late August and into September, when spot prices crashed down to new crop levels.

2010/2011: This was the least wild of the sample years – the corn inverse topped $1/bu. several times, but not by much. The inverse was resolved in late July and August and, like 1995/1996,  spot prices crashed down to new crop levels.

2011/2012: Last year was a drought year, and the resolution occurred in June, as new crop bids screamed higher.

The inverse in each of these years was quite volatile, with 25-50 cent swings not uncommon during the summer months. While the timing was different in each year, we can say that once it began, the resolution of nearby and new crop prices occurred rapidly. In each of these years, we can pinpoint a two week period when most of the adjustment occurred.


Responses

  1. Mitsamt welche Gärung und selbst jener Hanglage kommt es beim
    Hugo Sekt gut Hugo Cocktail Mosel an. Noch immer gilt zeigen jener Erfahrungssatz
    jenes BGH, wonach jenes verständiger Durchschnittsverbraucher in dem Allgemeinen nicht annehmen wird, Hugo Sekt dass ein
    als Nahrungsergänzungsmittel (Hugo Sekt ) angebotenes Produkt tatsächlich jenes
    Hugo Sekt ist, sobald es auch in jener empfohlenen Dosierung keine pharmakologische Wirkung hatte.

    Die Übermittlung der Daten erfolgt verschlüsselt nach Industriestandards.


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