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Corn market out in left field

Agriculture.com Staff 02/06/2016 @ 7:27pm

CHICAGO, Illinois (Agriculture Online) -- For years, visitors have witnessed the two trader statues carved into the concrete of the Chicago Board of Trade building.

One of the symbolic figures is a native American holding corn and a Babylonian farmer grasping wheat.

Corn has been a consistent leader atop CBOT markets.

Lately, the CBOT corn complex is in territory to which it's not accustomed: A follower of the wheat and soybean markets. For years, corn controlled or shared the lead with soybeans and wheat always the "stepchild" commodity.

The roles reversed on the CBOT floor in 2007, traders say.

Beginning in October 2006, the corn futures prices jumped from $2.50 to $4.40 within a six-month period. That jump was a result of the surging ethanol industry.

But, since June of 2007, the wheat complex has been on fire. From its low of $2.40 per bushel in late 1999 to this week's high above $12, wheat is near a 400% upswing.

Even reaching a new all-time high trading price Thursday of $5.68 3/4 in the July futures contract, corn has to share the spotlight with July soybeans marking an all-time high closing of $15.23 3/4. In an effort to take the lead back, corn gets overshadowed again.

So, when will corn return as the trading darling? CBOT traders differ on their opinions.

Laurie Calhoun, CBOT floor analyst with Penson GHCO, says corn lost its lead role in the markets starting with last year's wheat growing season.

"Corn and soybeans didn't have the growing troubles that wheat did," Calhoun. "However, we are in a La Niña year, and if the spring is too wet, there's a chance producers will plant more soybeans less corn. That would put corn back in the lead."

Plantings and any crop weather is what will bring corn back to center-stage, Calhoun says.

One floor analyst says while corn has been the weak sister it's been the safe play if you want to play short the market. "When the wheat and soybeans break, the corn would follow."

As a trader, keeping one eye on where the wheat money moves to could be imperative, says one trader.

"I think this money that has been moving this wheat market will shift to soybeans. I don't think we've seen a high for soybeans," the floor trader says.

If that happens, the corn market would follow the soybean market higher, traders and market-watchers say.

Joe Bedore, FC Stone's CBOT floor manager says it could be a while before the corn complex takes back a lead role.

"I've been predicting for weeks that our 'next' hot market is not corn or wheat, although wheat has surprised me, but instead this summer soybeans will kick its hind legs up and really run," Bedore says.

Bedore adds, "I think the bean market is going to raise hell around here before corn. For a lot of reasons namely big corn carryouts, big trades, and a lot of corn that is still going to be grown out there."

For soybeans, the world supply can't afford for the U.S. to have a short crop in 2008, Bedore says. "We can't afford a hiccup in yields."

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