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Contract differentails in Corn futures and Sept vs July
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Contract differentails in Corn futures and Sept vs July

  #1 (permalink)
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Contract differentails in Corn futures and Sept vs July

I would like to discuss Corn futures trading with someone who has been tracking it/trading it for a while. In particular the contract variances that currently exist between May, July Sept and Dec.

They do not seem to be in line, either in direction or levels, far beyond the regular difference one would expect in index or metal futures.

Is the current disparity due to particularities of this season crops?

I am thinking of switching from May to Sept (skipping July), as I believe Gann did. What experiences have you had on the May roll-over?

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  #3 (permalink)
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Answer
This post has been selected as an answer to the original posters question Answer

Interesting article here explaining some of it.

$12 corn?

Crops News, Agriculture News | Agriculture.com

....15-year low U.S. corn stocks supply
...Currently, a much slower-than-average planting season

With 2011 average net profits per acre running between $300-$500 per acre vs. $50-$100 historically, farmers are seeing returns very seldom experienced on grain farming.

however
in June of 2008 corn futures traded at a record price of $8.00 per bushel but fell back to the $3.00 mark in December of that same year. Likewise, the June 2008 soybean market hit blasted to $16.50 per bushel, only to sink in October to $8.50.

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  #7 (permalink)
The fun is in the numbers
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Hi Mike,

I have marked the reply above as assisting and he should retain the credit for answering the question.

Just for others who may pass this way, it was explained to me that there are huge differences between year to year, contract month to contract month, old to new crop and that this year's difference is not unusual. Factors in deliveries such as demand from China, weather etc play a role in contract price differentials that are not a factor in index futures, monetary futures, metals etc.

[my part]
These factors can vary quickly so the demand from China was pushing up prices in the May contract and then rains and increased plantings pushing down prices 2 days later. As a corn newbie it seems to me that the closer to expiry the more these "news" factors can play in large price swings in the near term month.

I have decided to go with Gann's advice and roll-over to (well do my price tracing on) Sept. This is because the contract roll-over gives a big jump/drop in price action so data I track such as change in midpoint, 3d average range etc have a shift and it takes a few days before my spreadsheet is back in sync.

It doesn't seem that trading corn is something you pick up overnight :-)

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  #8 (permalink)
The fun is in the numbers
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Sept Corn to fall?

This is a video I made last night
(volume is a bit low).
Corn to fall if break 546.75 - aquarian_ian's library

It shows the potential for corn to fall made with a spread indicator line.

Sept Corn looks like it may finish down today, yesterdays close was 546.50. (its' now 530)

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  #9 (permalink)
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5 min chart showing the breakdown

22 May 2012

This 5 min chart better matches the video.

Now in the 528 area
544 RTH high to 528 is 16 cents - big drop for corn in an RTH!

16 cents time $50 = $800 per contract.

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22 May 2012

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