Fundamentally Speaking

Depressed Corn Price Volatility

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Crop farmers and equipment dealers are not the only ones suffering from dramatically lower corn prices than seen in recent seasons.

Commodity traders, both on and off the floor are also bemoaning not only the low prices but the resultant reduced volatility.

The lack of any weather scares this year leading to a slow price grind lower has depressed the average daily trading ranges and the net percent change from the monthly highs to lows.

This graphic shows the average daily price range in cents per bushel and the percent change from the monthly high to low for each month January 2006 to September 2014 for spot corn futures.

For the whole time period January 2006 to September 2014, the average daily price range per month was 7.41 cents per day while the average percent change per month from high to low was 15.9%.

Since the beginning of this year, the average daily range has been 4.66 cents and the monthly percent change has been 9.8%.

Compare this to the January to September 2012 period that encompassed a very serious drought where the average daily price range was 10.2 cents and the monthly range was 15.0%.

With talk that corn may be in a bear market for the next three to four years, this is hardly good news for traders though will prove to be very beneficial to end-users that have not only had to deal with record high prices but unprecedented price volatility.

(KA)

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