Tidbits, Carry Spreads, Market Situation, China 1/18/26
- Wright team
- 1 hour ago
- 6 min read
Tidbits
When commodity futures prices add carry (return to storage) for a given commodity, it is telling farmers it will pay farmers to store that commodity. Typically, in a down market, the carry increases. Logically, in an up market, the carry decreases as the market reduces the incentive to store.
In recent years, we have developed a great deal of respect for the changes in the carry as a long-term indicator of the price direction.
Last year, the USDA presented a corn S&D in January that was very bullish when it unexpectedly reduced yield by 3.7 bushels per acre while corn exports were setting a record pace and corn ethanol crush was also a record large for the first four months of the marketing year. Corn futures were in an uptrend before the report was issued.
The March 2025 corn contract had made its contract low on 26 August 2024 at $4.04. The day before the January 2025 USDA reports, March corn settled at $4.56. On the day of the January 2025 USDA reports, March corn jumped 14½¢ higher and continued the uptrend until 19 February when it made its high for 2025 at $5.04½. Then the price trend was all downhill until late August despite a record large corn exports, 26.4% more than the previous year, corn for ethanol decline of just 0.96%, and feed use decline of 6.4%.
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