Soybean Seasonal Tendencies: When to expect rallies this year

by Ranulf Glanville, Dec 19th, 2014

As market analysts, our toolbox contains quite a few tools that give us insight into the markets and help us make recommendations. These include futures charts, cycles, crop reports, weather reports, world fundamentals, Canadian markets, input from local grain traders and seasonal odds.

Seasonal odds aren’t everything. (As I said, they’re really just one tool in the kit.) But they are important. They can help you stay tuned into typical seasonal patterns for selling. And when incorporated wisely, they can help you make decisions that generate maximum returns with minimum risk.

So, as we look ahead to 2015, here’s a review of the seasonal odds for soybeans. Plus, as we go I’ll give you some ideas about how they can be incorporated into a marketing plan.

The late-December, early-January rally 

  • Mild price gains are often seen from mid to late December, sometimes into January.
  • Indications of this rally can include lack of farmer selling and weather concerns in South America.
  • Prices frequently break by mid-February, so do some selling before the seasonal weakness – old-crop and possibly some new-crop, too.

NOTE: We are entering this period as this blog is being written. Make sure you are up to speed on how the seasonal rally is taking shape this year. Sign up for a free trial at the link below.

Spring rally

  • Time to sell more old-crop, and possibly some new-crop.
  • If February prices are below most farmers’ cost of production, then there’s a higher probability of strong spring rally.
  • Prices often fall hard in June and July if the weather is good, so if prices are profitable, sell before then.

Summer Rally

  • Usually a good time to finish old-crop sales (if not done yet).
  • Important to sell some new-crop if a weather scare lifts prices.
  • Can be brief, but occasionally lasts several weeks. Case in point: the US drought in 2012.
  • Very difficult to predict length or height as the market is emotionally charged at this time – best to just make a 20% sale and relax.
  • If there isn’t a rally, skip the sale. If it’s a full blown bull market make an extra sale or two

Pre-harvest Strength

  • Most years, there’s a small price bulge in September; it’s usually minor and not as exciting as the summer rally.
  • It is sometimes due to low supplies of old-crop soybeans before new-crop comes in.
  • There’s a time window for frost fear.
  • Looking back, you can see this pre-harvest bulge most clearly in years when there was no summer weather rally!

Rules of thumb

Having outlined the above rallies, keep in mind these are based on our reviews of the past 25 years. Of course, we don’t see a rally at each key point, every single year. But this does give you a general idea of what you might expect.

Our general objective is to make 5 or 6 sales into those seasonal windows. Again, other market factors still play a role.

For example, in bull markets featuring extremely profitable prices, you’ll want to make “extra” sales. But in bear markets, rallies can be minor and tend to peak on the early side of the time windows. Farmers often get stuck setting unrealistic targets in bear markets – something to bear in mind in the year ahead.

Of course, we tip off our subscribers to these rallies in our publications, hotlines and special alerts. If you’re not a subscriber, you may wish to highlight the above timeframes in a day-planner or calendar to remind you of when to make sales.

As you read this, the DePutter team is incorporating seasonal odds into our analysis of the soybean market.

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