How the export delivery process works

By Jon Scheve

I have received requests for an explanation of the corn futures delivery process. So, I contacted my good friend Joe Rich of O’Bryan Commodities to help me summarize this complex process.

The delivery process is a big driver of the spreads between futures month contracts. It also determines how much carry is needed in the market or if supply is limited and warrants an inverse to pull the grain out of storage. The delivery process can also help trigger cancellations of sales contracts, potentially in tight market years. Large carries or inverses can also provide indications of futures price direction.

History

Officials set up the current delivery process many decades ago when corn exports were nearly 30% of total demand. For 40 years, U.S. exporters shipped a relatively consistent number of bushels, but over the last 10 years, export volume has climbed by about 50%. Despite that growth, exports now account for only about 15% of total corn usage in the United States.… Continue reading