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June and July makes the corn crop

July 25, 2022

Keep checking the weather maps, they tell the story.

Jul 25, 2022

In the months ahead, the ebb and flow of a terrible conflict in Ukraine will continue to be the primary influence over the wheat market. A roiling wheat market cannot help but influence the markets for corn and soybeans, but it will not be the primary influence. Planting season is over and weather patterns in the Corn Belt are now the primary driver.

“July makes the corn crop” might be the oldest of sayings about the corn market and while it is a memorable line, it is not very accurate. I think a more accurate statement is “June and July make the corn crop.” Let’s check the evidence.

December corn futures prices tend to trend lower in the months of June and July. Over the past 22 years (2000-2021), the direction of December corn futures in the months of May, August and September is a coin flip – prices are as likely to trade higher as they are to trade lower. This is not true for June and July. Since 2000, December corn futures prices have traded lower from the first day of each month to the last day in 15 of 22 years. The Corn Belt earned its moniker with a solid tendency to produce a good crop.

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Data source: CBOT closing prices for December corn futures.
Data source: CBOT closing prices for December corn futures.
Not only do prices tend to trend lower, they are also more volatile during June and July. During the first 5 months of the year, monthly price ranges of more than 10% are not common. Not so for the months of June and July. During these two months, the monthly max and min December corn price spread exceeded 10% in 15 of 22 years. Prices move – often down but sometimes higher – during these two critical months.
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Data source: CBOT closing prices for December corn futures.

The war in Ukraine will continue to dominate the news in the world of wheat, because Ukraine and Russia are big players in the world wheat market. But if you are looking for direction in the corn and soybean markets, check the weather maps over the Corn Belt.

Source: Ed Usset, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.