It's time to keep an eye on corn

Key points

• Corn bottomed in February 2024 and has been trending higher since
• The good news is that price action is favorable above a newly rising 70-day moving average
• The bad news is that corn is soon to enter its most challenging time of year, and if history holds, traders should be looking for an opportunity to play the short side

After a rough start to 2024, corn has worked slightly higher

The chart below shows that corn futures fell hard into late February. Since then, price has been working its way higher and presently sits above a rising 70-day moving average.

Based on this interpretation, it is reasonable to argue that corn is in an "established uptrend." But as always, it depends on how you look at things. The chart below shows that corn presently remains below its long-term 200-day moving average.

So, is corn in an uptrend or a downtrend? To some extent, that is in the eye of the beholder. Regardless of how one sees the trend, there is reason for caution on the long side in the months ahead.

Corn is entering a most unfavorable seasonal window

As always, an annual seasonal chart is simply an average of what has happened in the past and is NOT a roadmap to what will happen this time. That said, note in the annual seasonal chart below that corn futures are entering a period of seasonal weakness that extends from the close of trading day of the year (TDY) #115 through TDY #155. 

For 2024, this period extends from the close on 2024-06-14 through 2024-08-13.

How challenging has this period been? The chart below displays the hypothetical cumulative $ +(-) achieved by holding a long position in corn futures during the TDY #115 through #155 period since 1974.

The table below summarizes corn futures performance during this period.

A 27% Win Rate reminds us that a price decline during this period is no sure thing. Nevertheless, the overall results skew heavily negative. Note that if we look solely at periods that saw a move of $3,000 or more in contract value, only one showed a gain, and thirteen witnessed a loss. This clearly indicates that traders should favor the short side for corn during this period.

What the research tells us…

No seasonal trend is guaranteed to play out as it has tended to in the past. That said, corn has a long history of exhibiting significant price weakness between mid-June and mid-August. Traders who insist on playing the long side of corn might seriously consider a trailing stop. On the other hand, aggressive futures traders should be looking for an opportunity to trade the short side of corn.