Corn Seasonality and the Spec Short

In February I did a piece entitled Seasonality of Grain Marketing. In that piece I asked producers to pay attention to three distinct periods that typically contain market volatility and could contain the high for the year. To review, the three periods are February 1 through March 31, May 1 through June 30 and July 1 through August 31. The first period has passed the next one is at hand.

In this piece I want to add the dynamic of managed money to the mix. I have talked in the last few weeks about the effect of the non-commercial (speculative) short position. That short position has a direct and clear effect on price as shown in the graph below.

Knowing that the non-commercial position is significantly short is an important piece of information for producers to know going in to the next seasonal period. The graph below shows the non-commercial short position at its peak for each year for the last ten years.

These position holders eventually have to buy in that short which will firm the market and offer producers another opportunity to hedge.