December 22, 2022
Two weeks ago I wrote about the possibility of a March corn futures price rally into January and shared historical seasonal information that supported that possibility. So far, March corn futures have indeed been inching higher as the New Year approaches, with March corn futures up approximately 20 cents since that blog.
As I pointed out, past performance is not indicative of future results. However, that strong seasonal tendency for March corn futures to rally into January seems to be coming to fruition. Now, the next topic of conversation stems around how you can use this information to your advantage if you’re looking to make cash sales in the New Year.
Pinning a market price high is nearly impossible, and with so many swirling geo-political activities, constant weather variables, and general supply/demand scenarios unfolding, marketing your grain in 2023 may prove to be tricky. I encourage you, however, to not fall into the trap of “store and ignore.”
Here are five market matters to be aware of to help you time corn sales from the bin.
Pay attention to the historical seasonal patterns of when corn prices have a historical tendency to ebb and flow. For example, March corn futures have a tendency to peak mid-January into mid-February. I know that is a broad four-week window to consider, but there are multiple dates within that window to be aware of that can impact whether or not a rally could continue or come to a screaming halt.
Mark the calendar
Within that four week window from mid-January to mid-February, four major events occur that can impact market price movements:
January 12 – USDA WASDE report
January 22 – beginning of the Chinese New Year (celebrations in China can last up to 16 days, but only the first 7 days are considered a public holiday)
February 9 – USDA WASDE report
February 23-24 – USDA Outlook Forum
Each of the events has the potential for major market movement, and the question is if it will go higher or lower. For the USDA report in January, USDA will report the final production numbers including acres and yield for the 2022 crop. Market gyrations shortly after the report are largely caused by an unexpected change in production numbers. This report has been known to add fuel to a rally or bring it to an abrupt end.
The Chinese New Year is important because China is easing COVID restrictions. This could mean that China needs to import more grains in the short term to assist with new demand, or export sales could ease. Traditionally, the country shuts down to celebrate and it is a quiet time for new export sales announcements.
The February USDA report is generally not a major market mover because the January report brings the fireworks. But since it is not usually a major report, the lack of fresh news can oftentimes lead to uninspired traders, and prices start to sell off.
The USDA Outlook Forum in late February is often the nail in the coffin for prices as the USDA projects potential acres for the upcoming spring. This is not an official report, but traders listen to what the USDA has to say.
The Outlook usually shares the notion of huge, hedgerow-to-hedgerow planted acres and projects record yields. The combination of the two on paper leads to increased production and provides the perception that the current tight-ending stocks situation will be eased in late 2023, leading to prices to fall.
South American weather
You’re already aware of the importance of weather watching in South America in the coming weeks as their grain crops are growing into the heart of their summer production. Each weather forecast for them will be traded and scrutinized.
Usually if there is a “weather threat,” it also occurs during that mid-January to Mid-February window, which adds another element to monitor to time your cash sales. Having an order working at your elevator ahead of time is a good idea – sometimes the weather events develop at night and affect night trade, which allows your price order to be triggered while you are sleeping.
For the past few months, the funds have slowly been reducing their long position in the grains. The question for 2023 is: will they make a triumphant return? Or will they find something else to invest their money in? Time will tell on this one.
Farmers looking to sell after New Year
Finally, after visiting with many farmers, there seem to be many plans for cash sales shortly after the New Year. Many producers had squared up their books for the end of 2022 and were waiting for the calendar date to flip before making more sales.
Farmers are also aware of the reality of bullish and bearish fundamentals still clashing, with a more cautious tone warranted this year in the wake of sharply higher interest rates. It will take a dramatic weather event or a new, sudden influx of demand to push prices higher. Last year, the stars all aligned perfectly, and this year that notion may be more of a struggle.
Please be aware of these five market matters as you gear up for your old and new crop cash sales in early 2023.
Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
About the Author(s)
senior market adviser, Total Farm Marketing by Stewart Peterson
Naomi specializes at helping farmers understand how to manage cash marketing needs and understand the importance of managing basis, delivery point considerations, cash flow needs and storage capacity. She earned her Bachelor of Arts in Political Science with a minor in Agriculture Business at the University of Wisconsin in Platteville. She has a Master of Science in Adult Education with an emphasis in Ag Economics from the UW-Platteville and a Master Certificate in Global Education, from the UW-Oshkosh.
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