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Volatility cranks up

05/02/2013 @ 2:22pm

Starting with last Sunday night’s forecasts and trading, this week has shaped up to be a wild one. A limit move up in corn futures on Monday emphasized how uncomfortable corn traders had become with their short positions when faced with a week of wet, cold weather.

  

It may be the Sunday night weather forecast that once again moves the market. Right now, traders perceive the weather will improve next week. At least the temperatures should improve. The rainfall forecast is more questionable, although it appears another 3- to 5-day stretch of wet weather is not in the cards.


During corn planting, often there is a week where 30% or more of the corn crop is planted. That is what the market needs to see soon or else traders will continue to be spooked.

  

The difficult thing for analysts and traders is that late planting is hard to correlate with lower yields -- especially lower national yields. Late planting needs to be followed by another event to really affect yields. The following years qualify as late planted and low yielding. The additional comment refers to the other yield-affecting problem:

 

1993:  Continued wet weather/flooding

1995:  Summer weather turned hot/dry, also high night-time temperatures

2011:  Summer weather turned hot/dry

 

Of course, there was a very late planted year that turned out just fine — 1984. The U.S. managed to grow a trend yield that year. This outlier year is perhaps holding back traders from panic.

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The risk of loss in trading commodities can be substantial.  You should therefore carefully consider whether such trading is suitable for you in light of your financial situation. 

 

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mark guildenzoph 05/02/2013 @ 4:29pm Really going back almost thirty years to try to justify a season that is not too accurate. With weather conditions changing for the worst again and most of us farmers have zero acres planted you can already assume yields dropping for the up coming harvest. Why am I telling you this take a ride through the entire corn belt it is very obvious? Now lets be honest does it even matter because in the June USDA report there will be so much speculation that the market will crash again another dollar regardless what is happening in the field. Should never have seen these low prices to begin with according to the real data, But that never slowed you guys down before.

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