About Corn (C)

During the last decade, Corn has been the leading crop in terms of production and acreage grown. The major producing nation for Corn in the world is the United States of America, with over 80% of the production of Corn in the United States centered in the mid-western states known as the Corn Belt: Iowa, Illinois, Nebraska, Minnesota, and Indiana.

The predominant feature of trade during the first quarter of the year is tax related corn marketing’s, known in trading lore as the "February Break". The "February Break" is probably one of the most popular and best documented seasonal phenomena of futures trading. After harvest, usually finished by early November, producers tend to concentrate their efforts on converting their crops to income, or "marketing". This tends to increase as the calendar year changes. Farmers, like other businessmen, try to incur expenses in the previous tax year and revenue in the current tax year to lower their tax liability. Couple this tax related selling with the need to generate cash flow to pay for seed, fertilizer, pesticides, and fuel for the upcoming planting effort, and one can see why Corn prices have tended to decline during the first part of the calendar year. The "February Break" is also typically exaggerated by the fact that interior waterways, the primary and cheapest way to transport grains, are frozen this time of year. Grain elevators, the middlemen who buy grain from farmers and store it for later sale to consumers, tend to lower their bids for grain during the winter to protect their profit margins as the frozen waterways increase their transportation costs. These forces tend to reach a crescendo in late February, just before field preparation for planting and the rivers begin to thaw.

Planting in the Corn Belt states of Iowa, Illinois, Nebraska, Minnesota, and Indiana tends to start in mid April and run through mid May. In recent years the majority of planting in the Corn Belt has started by April 20th and been completed by June 8th. Ideally planting should be done when the temperature is moderate and conditions are dry. If the fields are either too wet, or a late snow hits then planting will have to be put off. Late planted crops tend to produce lower yields. Historically, the probability of delay is quite large, so very often during planting the Corn market begins to build a risk premium into the crop at this time.

Several days after the corn crop has been planted, sprouts begin to emerge from the soil. These sprouts grow into the tall lanky plant we all recognize as Corn. As the corn plant mature, ears grow. The kernels which grow inside the ear of corn is a seed, and before seeds can be produced the plant must pollinate. In order for pollination, the corn ear produces a tassel, which is used to capture pollen. Tasseling usually occurs 10 days before the Corn plant begins to silk, or the emergence of a silk like strand from the end of the ears.

Dates based on the December 1997 USDA Agricultural Statistics Board Usual Planting and Harvesting Dates report

Silking, or pollination is the most crucial stage of development of the Corn plant. Pollination only occurs when the crop receives an adequate amount of moisture, and temperatures are semi moderate. If pollination does not go well, crop production will drop substantially. However, once pollination has occurred the corn crop is almost impervious to damage, and often referred to as a "made crop". The median date for pollination is the fourth of July, and hence the corn market tends to reach its maximum price by the first week of July. In several years, seasonal tops are put in by late May as the last of the new crop corn is planted. In most years, after planting corn prices tend to be weighed down by progress of the crop. Only in years when severe droughts have interfered with pollination have corn prices continued to rise.

After pollination, in late June and early July, the Corn kernels begin to form. The kernels are said to have "doughed" when they are showing a thick or dough-like substance. The dough-like substance is filled with a milk, or protein. It is the high protein content of corn which makes it an attractive feed, which is what accounts for the bulk of the demand for Corn grown in the United States. As the Corn plant concentrates its resources on making kernels, the stalk of the plant begins to die. This causes the entire corn plant to die, and the kernels begin to dry up. As the kernels dry out, the rounded end of the kernel not attached to the cob, begins to get a small impression in it, or a "dent". When roughly half of the kernels are showing dent, Doughing is considered completed. As the Corn crop is Doughing, the plant needs only minimal precipitation to survive as long as pollination has occurred properly. However, extreme heat with little or no precipitation can speed up the denting process, lessening the protein content of the Corn grown, and hence its usefulness as a feed (this situation is extremely rare). Normally, the US Corn crop completes Doughing by late September.

Denting, or the drying and concentration of the protein of Corn in the kernels usually occurs from mid August through September. Denting is said to be completed when all kernels are showing the tell tale dent and the ear is firm and solid. There is no milk present in most kernels. During the final stages of denting, the crop is susceptible to frost damage, from an early autumn frost. It is not uncommon to see a retracement rally with in the context of a greater bear market during either the Doughing or denting stages of development, due to an extreme heat wave or an early frost, respectively.

The Corn plant is considered mature when the plant is about ready to be harvested with shucks openings and there is no green foliage present. When the Corn plant is mature it is considered safe from frost. Corn typically matures from early September for early planted crops to early November for late planted and re-planted crops.

After the Corn crop has matured it is harvested. The bulk of Harvesting takes place in late September through mid October. Ideally, after the Corn plant has matured, farmers like to see cold weather and little or no precipitation so the ground is firm for the harvesting equipment. When too much precipitation is present, and the weather is unseasonably warm, the ground can be too muddy for the heavy equipment used in the harvest effort, as well as in extreme cases one witnesses mold-based diseases and insect problems. Harvest delays are typical, but very rarely do they result in any real loss of supply.

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