Five-Dollar Corn

On Thursday, for the first time since Aug. 1, December 2023 corn futures were able to rally and close above $5. Five-dollar corn isn’t what it used to be with inflated input expenses that farmers have had to deal with this year, but it is a better price then what they’ve had for the last two months. The trade talk surrounding the move centered on funds holding heavy net short positions and rolling from the December contract to the March, as well as some short covering that may have gotten a little heavy-handed. The roll was evident in the volume of spread trading that took place and the movement in the spread itself, as the carry from December corn to March corn futures narrowed from -$0.15 to -$0.12 in one day alone. The action of rolling may have been sufficient to rally the market in and of itself, but fundamental traders were searching for reasons behind the move as well. Unconfirmed rumors of China looking to buy some corn out of the Pacific Northwest was what they came up with. If confirmed, the corn rally may have legs to keep it walking forward, if not, and the rumor mill has tricked the market, the treat may have been five-dollar-plus corn.

Hot Bond Talk

If you are under 40, you’ve probably never heard so much talk of bonds in the financial news in your life as what you have in the last two weeks. Bond futures once again pushed to new lows across the board on Thursday, with the 30-year treasury yield surging above five percent this week for the first time since March 2007. The fever-pitched discussion surrounding bonds would lead one to believe that we are close to a bottom in bond futures, if you buy into the theory that when the news is reporting on something the trend is close to changing. If that turns out to be the case, the financial sector may not see any radical shifts in investment strategies or structure, but if bond yields continue to climb above five percent, it may spur a dramatic increase in bond trade that has current bond holders scrambling to exit if they are leveraged, and new bond buyers looking to purchase a theoretically safe investment with acceptable yields.

Have a comment or question? Please reach out to derrick.hermesch@pinion.global.com.