Fundamentally Speaking

October Price Action for Dec Corn & Nov Beans

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Given the history of price action in record yielding years and expectations of additional production hikes in subsequent USDA reports, we surmised that values in October should continue the downward trend seen in August and September.

A review of October price action since 1991 for both December corn and November soybean futures actually shows a tendency for prices to post slight monthly gains, even in high yielding seasons.

The accompanying graphic shows the percent price change in October for both December corn and November soybeans from 1991 and the 1991-2012 average.

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Recall there was no October 2013 USDA crop report due to last year's government shutdown.

The average price change for corn was up 2.0% and a 1.2% soybean price advance.

For the analog years we have cited quite frequently this summer including 1992, 1994, and 2004; corn price changes were down 1.4%, steady, and down 3.3% while soybean price action featured a 1.3% increase, steady, and up 0.2% respectively.

The largest price declines came in October of 2008 due entirely to the commodity price collapse seen during the height of the economic and financial meltdown in the fall of that year while the largest price gains came in 2006 on the heels of a sharp wheat rally.

The point here is that uncovered end-users looking for a continuation of the sharp downside action seen over the past few weeks may be surprised by the relative firmness of futures even in the face of a monstrous crop.

(KA)

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