Old/new-crop corn and soybean spreads widening

Old-crop soybean and corn futures at the Chicago Board of Trade moved higher during the week ended Wednesday (May 22), as tight supplies provided underlying support.

New-crop soybeans lagged to the upside, while rapid seeding progress across the Midwest caused corn to post small losses in the deferred months.

The spread between the old- and new-crop contracts is expected to continue to widen for both soybeans and corn, according to David Fiala, of FuturesOne in Lincoln, Neb.

For corn, farmers have made good seeding progress over the past week. While there may still be some seeding delays, the bulk of the corn crop was in the ground, and any rain at this point will be beneficial for yields in the long run.

Fiala said new-crop corn prices had more room to the downside given the good production prospects. However, the corn crop was planted later than normal, and corn likely won’t be available until three or four weeks later than it was in 2012.

“We have a tight old crop, and a late new crop, which means there will be a need to ration demand for the old crop longer than normal,” said Fiala.

July corn is currently trading at a US$1.28-per-bushel premium over the new-crop December. Fiala said the spread could widen out to US$2, and noted cash bids are already that far apart or more.

The situation is similar in soybeans, with tight old-crop supplies and expectations for a large new crop. Production issues over the growing season could lead to some choppiness in the new-crop contracts, but the market will need to work to shut off demand in the tightening old-crop stocks.

July soybeans were trading at a US$2.56 per bushel premium over the November contract on Wednesday. Cash bids across the Midwest were showing a spread of over US$3 in many areas.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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