By Karen Braun
FORT COLLINS, Colo.- Chicago-traded corn futures have set records this spring with their rapid rise to multi-year highs, but the yellow grain has notched yet another first, one that is very unpleasant for the bulls.
By early May, most-active CBOT corn futures had gained more than 50 percent since the start of the year, easily the largest-ever rise for that period since at least 1973. The second most-impressive was the 38 percent rise during the same time frame in 2008.
But futures have come more than a dollar per bushel off those highs set less than three weeks ago, resulting in historically steep losses. Through Tuesday, most-active July futures had dropped 15 percent since May 7, when the contract topped at $7.35-1/4 per bushel.
That is the largest percentage fall in July futures during that period since at least 1973, well ahead of the prior biggest losers: 2001 and 2014 with respective declines of 8 percent and 7 percent. Through Tuesday, the 2021 record losses still hold when starting with any date between May 5 and May 13.
Both July and new-crop December corn futures remain at eight-year highs for the date and hedge fund managers still hold very heavy bullish bets in the yellow grain. But signs of weakness have clearly started to creep in, spooking the optimists.
The somewhat abrupt tightening of global corn supplies to multi-year highs initiated the rise in prices last year. Unexpected crop shortfalls coupled with robust demand, especially the unprecedented volumes purchased by China, have kept market action largely in the bulls’ favor.
But the early May surge may have been too much as evidenced by the record collapse in futures since then. The US crop has been planted in an efficient manner, and although concerns about dryness in some areas may linger throughout the summer, many of the parched regions have received rain within the last week.
July corn plunged 5.6 percent on Tuesday, the largest single-day percentage fall for the most-active contract since Aug. 12, 2019.
Purely for interest, I asked users on Twitter between Monday and Tuesday when they believe most-active corn futures will first slide below $4 per bushel. Of the 1,046 voters, some 43 percent believe that price level will be avoided until at least Oct. 1, 2022. – Reuters
