History suggests 2013 market year average corn prices range

decrease font size  Resize text   increase font size       Printer-friendly version of this article Printer-friendly version of this article


Current Chicago Mercantile Exchange (CME) futures prices suggest that market year average (MYA) corn prices for 2013 will be near $6.00 per bushel. Obviously, prices could vary from $6.00. In this post, historical price changes are used to evaluate possible 2013 MYA prices. Historical price changes suggest there is an 8% chance of the MYA price being below $4.50 and a 19% chance of MYA price being below $5.00 per bushel.

Historical Price Changes

MYA prices are national, cash price farmers receive for corn from the months of September to the following August. These MYA prices are compared to average settlement prices for the December Chicago Mercantile Exchange futures contracts in the December prior to expiration. These futures prices serve as a way of predicting the MYA prices.

Percent changes are calculated for the MYA corn prices and the futures prices. To illustrate take the 2011 MYA price is 6.22 per bushel, which represents the price from September 2011 to August 2012. The average settlement prices of the Dec 2011 CME contract in December 2010 is $5.48. The $6.22 MYA price for 2011 is 14% higher than the $5.48 futures prices (14% = $6.22 MYA price / $5.48 futures price - 1).

Percent changes between 1975 through 2011 averaged -7% (see Figure 1), meaning that the MYA prices average lower than the December futures prices. Lower MYA prices than futures price reflect the fact that there typically is a basis between cash and futures prices.

click image to zoom Larger percent differences exist between these futures prices and MYA prices (see Figure 1). MYA prices were the furthest below futures prices in 1986 (-34%), 1981 (-32%), 1998 (-32%), 1999 (-25%) and 2001 (-23%). MYA prices were the furthest above futures prices in 1995 (30%), 1988 (28%), 2006 (23%), and 2012 (21%).

Historical Variability and 2013 MYA Prices

Historical variability can be used to gain a feel for the range of prices possible in 2013. Currently, the December 2013 futures contract is trading around $6.40 per bushel. Given the average change between the MYA and futures contracts from 1975 through 2011, the expected 2013 MYA price is $5.95 ($6.40 futures price x ( 1- 7% average decline)).

Given history, there is a range of possible prices. If the largest price declines occur, 2013 MYA prices would be:

  • $4.38 if a year like 1981 occurs,
  • $4.79 if a year like 1998 occurs,
  • $4.88 if a year like 1999 occurs, and
  • $4.97 if a year like 2001 occurs.

Conversely, if some of the largest price increases occur, 2014 MYA prices would be:

  • $8.29 if a year like 1995 occurs,
  • $8.21 if a year like 1988 occurs,
  • $7.88 if a year like 2006 occurs, and
  • $7.74 if a year like 2010 occurs.

Historical price changes can also be used to gain a feel for the chances of low prices. Percentage changes suggest that 2012 MYA prices:

  • Will be below $4.50 in 3 out of 37 years, or 8% of the time.
  • Will be below $5.00 in 6 out of 37 years, or 16% of the time.
  • Will be below $5.50 in 14 out of 37 years or 48% of the time.
  • Will be below $6.00 in 22 out of 37 years, or 59% of the time.

Summary

Historical price changes suggest that a wide range of prices are possible in 2013. Price below $4.50 per bushel are possible. Some of these are low and could signal lower net farm incomes. While not likely, prices changes outside of historical changes also are possible.

Source: FarmDocDaily


Buyers Guide

Doyle Equipment Manufacturing Co.
Doyle Equipment Manufacturing prides themselves as being “The King of the Rotary’s” with their Direct Drive Rotary Blend Systems. With numerous setup possibilities and sizes, ranging from a  more...
A.J. Sackett Sons & Company
Sackett Blend Towers feature the H.I.M, High Intensity Mixer, the next generation of blending and coating technology which supports Precision Fertilizer Blending®. Its unique design allows  more...
R&R Manufacturing Inc.
The R&R Minuteman Blend System is the original proven performer. Fast, precise blending with a compact foot print. Significantly lower horsepower requirement. Low inload height with large  more...
Junge Control Inc.
Junge Control Inc. creates state-of-the-art product blending and measuring solutions that allow you to totally maximize operating efficiency with amazing accuracy and repeatability, superior  more...
Yargus Manufacturing
The flagship blending system for the Layco product line is the fully automated Layco DW System™. The advanced technology of the Layco DW (Declining Weight) system results in a blending  more...
Yargus Manufacturing
The LAYCOTE™ Automated Coating System provides a new level of coating accuracy for a stand-alone coating system or for coating (impregnating) in an automated blending system. The unique  more...
John Deere
The DN345 Drawn Dry Spreader can carry more than 12 tons of fertilizer and 17.5 tons of lime. Designed to operate at field speeds up to 20 MPH with full loads and the G4 spreader uniformly  more...
Force Unlimited
The Pro-Force is a multi-purpose spreader with a wider apron and steeper sides. Our Pro-Force has the most aggressive 30” spinner on the market, and is capable of spreading higher rates of  more...
BBI Spreaders
MagnaSpread 2 & MagnaSpread 3 — With BBI’s patented multi-bin technology, these spreaders operate multiple hoppers guided by independent, variable-rate technology. These models are built on  more...


Comments (0) Leave a comment 

Name
e-Mail (required)
Location

Comment:

characters left


AppliMax Spray Nozzle Calibrator

Features & Options: Quickly and easily ensure your spray nozzles are applying the correct application rate and check nozzle wear. ... Read More

View all Products in this segment

View All Buyers Guides

Feedback Form
Feedback Form