The Hidden Risks in Holding Corn

The decision to store corn after harvest is not just about logistics for American farmers. It's also a bet that the market will recognize greater value over time.

However, history suggests that waiting for higher prices may not be a reliable strategy. Data going back to 1974 shows that holding corn through futures resulted in an average loss of only one cent compared to prices immediately before Labor Day.

But what seems insignificant at first glance is actually a warning sign. The data reveals that when July corn futures reached delivery the following summer, corn finished lower about two-thirds of the time. This means that individual marketing years can be far more painful than the long-term average suggests.

The article cites multiple examples from history where waiting nine months increased exposure to losses. In 23 years, there were significant losses in the short term. The chart of July corn futures after Labor Day makes it clear that short-term moves were relatively modest in many years, while price changes into December and the following July could become considerably larger.

The better question farmers should be asking is not 'Will corn prices go higher?' but rather 'Am I being paid enough to assume the cost and risk of waiting?'