Crop Years and the Futures Curve: What You Need to Know

By Brad Zigler

Thursday's commentary ("Wheat In The ‘Teens,") sparked questions from some readers who wondered what I meant when I referred to the "current crop year" slipping into backwardation.

Crop years punctuate the futures curve for agricultural commodities such as grains and oilseeds.

A crop year is defined by a commodity's harvest date. A wheat crop planted in 2007, but harvested in 2008, is therefore defined as a 2008 crop. A crop year is sometimes defined as a marketing year. The 2008 crop marketed during the latter part of 2008, and the early part of 2009 may be called the 2008-09 crop even though it could have been planted in 2007.

Not surprisingly, crop years vary from commodity to commodity.* Chicago wheat's current crop year (2008), for example, started with the July 2007 contract and runs through the May 2008 delivery. Active wheat contracts now stretch out over four crop years (2008 through 2011) on the CBOT:

click to enlarge

From this perspective, you can see soft, red winter wheat as a series of inverted markets, bespeaking the tight supply situation.

So, how do you like having a little serial with your cereal?

*Crop years for key CBOT commodities:

Wheat: July through May

Corn: November through September

Soybeans: November through September