Commodity Markets
Of course, there are other ways to mark the passage of seasons, most notably looking for when solstices are scheduled, but where’ s the fun in that? We could also use Punxsutawney Phil’ s prediction, as I talked about in Farmers Hot Line’ s February issue, but the mere mention of the rodent weatherman’ s name is enough to get my meteorology friends fired up, so I go with the meteorological calendar to tell me spring has arrived.
As mentioned in the opening, this ties in with my study of the various markets of the grains sector. The meteorological calendar fits with the end of the marketing year quarters( if one subscribes to the idea of marketing years, a subject for another day), with the close of February being the end of Q3 for the various wheat markets and the end of Q2 for corn and soybeans.
I want to start this discussion with soybeans, as this market comes with an asterisk. Yes, I know the standard marketing year runs from Sept. 1 through Aug. 31, but that doesn’ t reflect reality. There are actually two marketing years for soybeans: The first is for the U. S. and runs from Sept. 1 through the end of February, the second is for Brazil and runs from March 1 through the end of August. I’ ve long found it interesting that the United States Department of Agriculture, in all its glory and wisdom, sticks with the September to August marketing year for soybeans despite the fact the U. S. has become a secondary player in the global market thanks to detrimental trade policy( trade wars, tariffs, etc.). The reality is the marketing year should focus on Brazilian supply and demand, but again, that’ s a subject for another day.
What do my seasonal studies show for the National Soybean Index? Based on both the five-year and 10-year seasonal studies, the index tends to rally from the first weekly close of October through the second weekly close of May, gaining an average of 17 %( five-year) and 12 %( 10-year). Within this normal seasonal rally, we see that the index tends to stay firm through the spring quarter, adding between 1 %( 10-year index) and 4 %( five-year). This is an
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