CHICAGO: If the recent tariff-fueled selloff in Chicago corn futures felt extreme, that’s because it was, especially given the season. Huge swings in new-crop corn prices are not typically seen in the beginning months of the year due to upcoming harvest uncertainties across the Americas.
Corn trade has been relatively muted over the last several trading sessions as the market awaits month-end data from the US Department of Agriculture as well as further US tariff news.
But CBOT December corn futures, which represent the approaching US corn crop, plunged nearly 7% over an eight-session span that ended on March 4.
That marked the worst eight-session downturn for the first three months of the year since an 11% loss in March 2011, when an earthquake in major commodity importer Japan threw global markets into chaos.
The latest dive was even steeper than during the pandemic onset in March 2020, when new-crop corn shed 6.2% over eight sessions. Global economic concerns in early 2008 and 2009 also led to sharp early-year, eight-session losses of nearly 10%.
South American weather sometimes spurs selloffs in new-crop soybeans at this time of year. But the tariff threats drove CBOT November soybeans 5.4% lower in the eight-session stretch ended on March 4. Bigger eight-session losses for new-crop beans were recorded in January 2021 and March 2023, and an 8% tumble in March 2020 remains the month’s largest since 2011.
Seasonality trends often take the backseat to widespread economic and geopolitical concerns, so the realm of possibilities is wide open. But it would be a big deal if new-crop corn does not eventually take out its year-to-date high of $4.79-3/4 per bushel, set on February 20.
December corn futures have not set their year-of-expiration high in February since 1982. February is the second least common month for new-crop corn to mark yearly highs, tied with September at two instances apiece since 1973. October is the rarest, occurring just once in 1974.
November soybeans also marked their yearly high in February of 1982, though they did so during the month twice since, in 1998 and 2019. April and October are the least typical month for soybeans’ high with two cases each since 1973. June is the most popular month for new-crop contracts to notch their annual highs followed by July. These two months featured corn’s high in 16 of the last 52 years, and they hosted a few more for soybeans at 20.
Both corn and soybeans are currently about 6% below their February highs. December corn on Wednesday settled at $4.51-1/2 per bushel, roughly 28 cents off the February top, and November soybeans ended at $10.10, down almost 66 cents from last month’s high.
Large speculators built mega-bullish corn views earlier this year but rapidly reduced them in recent weeks, much against the norm. In the five weeks ended on March 11, money managers were net sellers of nearly 218,000 CBOT corn futures and options contracts, by far a record selloff from a fund net long above 300,000 contracts. As of March 11, money managers’ CBOT corn net long stood at 146,541 contracts, down from 364,217 on February 4.
US drought concerns are already brewing for the Corn Belt, which could certainly create price volatility over the next few months. But if that doesn’t unfold, there is at least one mildly savory nugget for the bulls.
At some point before expiration, December corn is extremely likely to return to at least $4.70 per bushel, which was last month’s average price and equal to the 2025 insurance guarantee for US farmers.
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