Corn Seasonality: Consistent or Changing?
Have you ever heard people talk about seasonality in the corn market? The idea is that corn futures follow a somewhat predictable pattern year over year, which leads to better times to sell. Let's explore this concept and my findings.
Understanding the Measure of Center
To analyze seasonality, the first step is to find a measure of center for each year to “level the playing field.” With corn futures trading a several dollar range, comparing a $3.00-$4.00 range to a $5.00-$6.00 range directly doesn’t work.
When selecting a measure of center, there are two primary options—mean (average) or median (middle number). While most might opt for the average, I prefer the median in this case. Here’s why: in years with unfavorable weather, prices can spike, drastically affecting the yearly mean. This typically happens in June, which then skews the chart’s peak to that month. However, since this occurs in fewer than half of all years, the median remains unaffected by these outliers. Since the goal of a seasonal chart is to reflect what happens more often than not, the median is the better choice.
Research Methodology
For this research, I analyzed daily closing prices throughout the year. To ensure no data gaps, I filled in weekends by carrying forward Friday’s price to Saturday and Monday’s price to Sunday. For holidays or other market closures, I averaged the two adjacent days to maintain a smooth dataset.
Once I had the daily closing prices, I calculated the median price for each year and divided each day’s closing price by that median. This helped identify which days were above or below the median price. I conducted this analysis over a 20-year period.
Then, I examined the median values over different time spans to assess the consistency of seasonality and identify any shifts.
Findings
20-Year Median Trends
The first chart above illustrates the median values for December corn over the past 20 years. I selected the December contract for each year, as it aligns with the harvest period.
The highest point occurs in May-June, indicating this period historically produces the highest median price.
A value above 100% signifies prices above the median.
A notable peak appears in March.
The sharpest decline occurs from mid-June to early July, dropping from 104% to 96% in just a few weeks. This decline reflects increased confidence in the crop, which typically causes prices to fall rapidly.
The latter half of the year does not surpass the 100% mark, underscoring the importance of forward-selling harvest needs.
Comparing Different Time Periods
The next chart compares median values over 5, 10, 15, and 20-year spans.
The 5-year data appear more sporadic, as this timeframe isn’t large enough to fully trust median values. However, given the rapid advancements in agricultural technology, recent data still holds relevance.
Excluding the 5-year span, the 10, 15, and 20-year medians align closely, suggesting that seasonality has persisted over time and remains a reliable trend.
Evaluating the Last Two Decades
This final chart compares data from 2005-2014 vs 2015-2024 to assess how trends have evolved in the past 10 years.
While some differences exist, the significant overlap between these two lines is striking.
Over the past decade, January-February prices have shown more strength.
Opportunities to sell December corn above median values after the month of June have decreased compared to prior years.
The Verdict
As we enter February, corn prices have already rallied significantly off the bottom. It’s not too early to consider 2025, and historical data strongly supports the concept of seasonality in the corn market. Understanding these patterns can help inform better marketing decisions and optimize selling strategies in the years ahead.
Casey Christianson
Quantitative Analyst | CODAK Market Advisor, Northern Plains
With a background in advanced mathematics and statistics, Casey’s expertise helps CODAK increase objectivity, speed, and precision in risk management decisions, driving greater client profitability.
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