- I've been tracking the similarity in the corn markets' (cash and futures) price trends from 2010-2014 and 2020-2024.
- Meanwhile, the Kansas City Royals have also been following a similar path to a decade ago, dominated by futility interspersed with sudden bursts of winning.
- Putting aside hard-hitting analysis for a moment, there is a connection between King Corn and the Royals.
Some of you may recall I grew up on wheat farm in southern Kansas[i]. My summer nights were spent listening to the Kansas City Royals (Major League Baseball team) while sitting in a truck waiting for Dad to come around to unload the combine[ii]. Later, the games would be on the radio in the office of the branch elevator[iii] of the local cooperative I worked at meaning I would catch bits and pieces of the games between dumping trucks. The voices of Denny Matthews and Fred White coming across on the am radio a constant back in the day. This was also the point in my life when farmers, while sitting in line waiting to unload, would often ask what the markets were doing. This connection stayed with me, to the point when I began working with seasonal analysis I eventually found a connection between the Royals success (or lack thereof) and King Corn’s trends.
As you know, I’ve been tracking the similarity in trends between the Dec14 and Dec24 corn (ZCZ24) futures contracts, and as of last Friday’s close (Dec24 = $4.18), the last weekly close for the month of September, the correlation was a positive 91%. The following Sunday (September 29, 2024), the 2024 MLB season came to an end with the Royals posting 85 wins. The season played out with a 51% correlation to how the team did back in 2014. What stands out to me, looking at the charts, is how the Dec24 corn futures contract put in an earlier low, rallying roughly 30 cents off its low weekly close in late August, about the same time the Royals had a late-season struggle winning only 15 of their last 32 games. This agonizing stretch (for fans, that is) included two seven game losing streaks. Yeesh… But the Royals made it to the post-season, and in the end, that’s all that mattered.
What does this tell us about 2025? After the Royals locked in a 2024 playoff berth, my son Ben texted me with the question, “Does this mean the Royals are taking the World Series next year?” The fan in me wanted so badly to say yes, but the analyst in me, the one who knows Chaos Theory teaches us that a change at a key point in time leads to a changed result, understands there is no way to make that assumption.
But what about the corn market? Recall December futures moved into a long-term sideways trend from the fall of 2014 through the fall of 2020, with a range of roughly $1.00 ($3.20 to $4.20). If that’s the case in corn again this time around, and discounting the August 2024 spike low to $3.85, Dec futures could be looking at an approximate trading range between the big round numbers of $4.00 and $5.00. But again, Chaos Theory creates the Analogy Fallacy, meaning there is not such thing as analogous years.
But it’s fun to think about.
As a fan, barring an unforeseen change (trade, injury, etc.), I’m bullish the Royals for 2025. As an investor, I’m also bullish Dec corn after it ended the previous major downtrend during August 2024. We don’t know how high subsequent Dec futures contracts could go, or how long it might take to get there, but it will be interesting to watch unfold.
[i] I usually say, “southwest Kansas”, unless I’m talking to folks from the Wheat State. They almost always point out to me that Lewis IS NOT southwest Kansas. Feel free to look it up on a map.
[ii] Back then, before irrigation systems changed the overall climate of the area, humidity wasn’t an issue.
[iii] A shout out to the Centerview Elevator.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
