62
MOTHER NATURE
MAKES CORN POP
Corn tends to peak in June under normal crop
years, as planting is complete and farmers are
looking for cooperation from Mother Nature
to produce increased production yields. Look
to sell on or about June 24 and hold through
August 1. This is when we typically get a
“drought scare” or mid-summer rally. The 40-
year history of this timing strategy shows a win
in 27 of those years, for a success rate of 67.5%.
With the price increase in corn headed into
summer, we normally see the market settle back,
as farmers have a better idea of their crop size
and start to hedge or forward contract sales out
to lock in a profit. Depending on the levels of
volatility, traders can look to sell futures or buy
put options or once again look for alternative
trading opportunities.
The chart below has Deere & Co. (DE)
overlaid with corn prices and the bottom line
showing the seasonal tendency of corn prices
since 1970. As you can see, there is a high
correlation of the price of corn and the share
price of DE. One can look to sell DE, buy puts,
or write calls in the seasonally weak timeframe
that starts in June and goes into July. See pages
133–138 for additional correlated trades.
Chart courtesy TradeNavigator.com
CORN (C) BARS AND DEERE & CO. (DE) CLOSES
(WEEKLY DATA JANUARY 2009–MAY 2010)
ENTRY EXIT PROFIT/
YEAR DATE CLOSE DATE CLOSE LOSS
1970 6/24 133 1/4 7/30 130 5/8 $131
1971 6/24 154 1/4 7/30 132 1/2 1,088
1972 6/26 122 3/8 8/01 126 5/8
–213
1973 6/26 210 1/4 8/01 278 –3,388
1974 6/26 291 3/4 8/01 369 1/2 –3,888
1975 6/25 262 1/2 7/31 287 –1,225
1976 6/24 294 3/4 7/30 280 1/4 725
1977 6/24 228 1/2 8/01 195 1,675
1978 6/26 257 1/4 8/01 225 1/2 1,588
1979 6/26 315 1/4 8/01 288 1/2 1,338
1980 6/25 290 1/2 7/31 335 1/4
–2,238
1981 6/24 347 7/30 335 1/4 588
1982 6/24 271 1/4 7/30 245 3/4 1,275
1983 6/24 304 1/4 8/01 330 1/4
–1,300
1984 6/26 322 1/2 8/01 293 1/4 1,463
1985 6/26 257 8/01 232 1,250
1986 6/25 189 3/4 7/31 165 1/4 1,225
1987 6/24 196 1/2 7/30 162 1/2 1,700
1988 6/24 347 1/2 8/01 290 2,875
1989 6/26 244 1/4 8/01 222 1/2 1,088
1990 6/26 283 3/4 8/01 255 1/2 1,413
1991 6/26 237 1/4 8/01 262 1/2
–1,263
1992 6/24 253 3/4 7/30 221 3/4 1,600
1993 6/24 226 1/4 7/30 235 3/4
–475
1994 6/24 250 1/2 8/01 217 3/4 1,638
1995 6/26 272 1/2 8/01 282 1/2
–500
1996 6/26 388 3/4 8/01 360 1/2 1,413
1997 6/25 242 1/4 7/31 265 1/2
–1,163
1998 6/24 265 3/4 7/30 220 1/4 2,275
1999 6/24 216 1/2 7/30 203 1/4 663
2000 6/26 202 3/4 8/01 179 3/4 1,150
2001 6/26 193 1/4 8/01 215 1/4
–1,100
2002 6/26 229 8/01 249 1/4 –1,013
2003 6/25 234 3/4 7/31 206 1,438
2004 6/25 280 1/2 8/02 218 1/4 3,113
2005 6/24 242 8/01 231 3/4 513
2006 6/26 234 1/2 8/01 240 1/2
–300
2007 6/26 367 8/01 319 2,400
2008 6/25 744 1/2 8/01 565 8,975
2009 6/24 395 7/30 332 1/4 3,138
40-Year Gain $29,669
JUNE SHORT CORN (SEPTEMBER)
TRADING DAY: 18—HOLD: 25 DAYS
Corn Seasonal Pattern since 1968
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 62
MONDAY
20
TUESDAY
21
WEDNESDAY
22
THURSDAY
23
FRIDAY
24
SATURDAY
25
SUNDAY
26
Markets are constantly in a state of uncertainty and flux, and money is made by
discounting the obvious and betting on the unexpected.
— George Soros (Financier, philanthropist, political activist, author, and philosopher, b. 1930)
It is totally unproductive to think the world has been unfair to you. Every tough stretch is an opportunity.
— Charlie Munger (Vice-Chairman Berkshire Hathaway, 2007 Wesco Annual Meeting, b. 1924)
Whenever you see a successful business, someone once made a courageous decision.
— Peter Drucker (Austria-born pioneer management theorist, 1909–2005)
There is no great mystery to satisfying your customers. Build them a quality product
and treat them with respect. It’s that simple.
— Lee Iacocca (American industrialist, former Chrysler CEO, b. 1924)
There is a perfect inverse correlation between inflation rates and price/earnings ratios...
When inflation has been very high…P/E has been [low].
— Liz Ann Sonders (Chief investment strategist, Charles Schwab, June 2006)
Start Long Cattle(J)—65.0% Accuracy Since 1970—End Feb. 7 , 2012—Page 60
End Short Silver(N) (May 13)
Start Short Corn(U)—67.5% Accuracy Since 1970—End Aug. 1—Page 62
JUNE
LT:
US(M), CL(N)
FN:
KC(N)
FN:
CL(N)
OE:
C(N), S(N), W(N)
c01_CTA_2011_pgs_12-119_c01_cta_2011_pgs_12-119 7/21/10 2:03 PM Page 63

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