Understanding seasonal tendencies is crucial for making informed marketing decisions. Markets ebb and flow with the seasons, and these patterns can significantly aid farm marketers. Read on for some thoughts on this topic, using canola as an example.
In Canada, the fall tends to see prices of many crops under pressure due to abundant supply. Conversely, spring often brings a price surge, especially in response to weather-related issues during planting. Successful marketers use these seasonal odds to time their sales, sometimes following a calendar of tendencies to anticipate price movements. For example, a new wheat contract high in late December may signal further gains in January. Meanwhile, the broader markets often rally in January if there is any perception of a crop threat in South America. (Farmers are certainly hoping this tendency holds this year!)
Seasonal patterns vary with market conditions. In years of heavy crop production, patterns differ from years with short crops. Farmers should also consider factors like chart signals and basis values when selling. A marketing guide based on seasonal rallies—such as Winter, Spring, Pre-harvest, and Post-harvest rallies—offers opportunities for forward contracting and selling. The Winter Rally, from late December to late-January, often strengthens grain prices, while the February slump typically brings lower prices as farmers sell to meet financial commitments. Here are some tendencies for canola, a bellwether Canadian crop.
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