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Advisor

Changes in seasonal trends

Roy Smith's new article on seasonal trends says that with corn most of the price appreciation from harvest until spring is from basis improvement, not from the futures prices going up. For  beans he's seeing that  the high is more likely to come in March and April. Years ago, it used to come in June.

 

"In recent years it has been more profitable to store for price appreciation in both the futures and cash markets," he says.

 

How much do these long-term seasonal price patterns play into your plans this year?

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Oh, here's a link to the story: Click here

 

John

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Senior Contributor

Re: Changes in seasonal trends

This chart is one more nail in the coffin of those who like to sell the cash and buy back on paper.  Very seldom works (but when it does, that's what you remember).

 

I would like to see a chart of the trend of movements.  Not just that certain events are happening at different times, but the rate of change.  The average of 1 and 5 is 3, but 3 doesn't help much if the number is already really closer to 4.

 

I always use seasonals and most years they help, but in '07 and '10 they could bite hard.  I use to like Winning The Game but several years ago, before the big price rise, I told one of the presenters he needed to provide a better mechanism for getting out when using seasonals didn't work.  He didn't, but then, he doesn't use Winning The Game anymore, either.

 

This year, I'm going to go through a major review of marketing plans, including seasonals, sell at a profit, timing and so forth.  It's not enough to make money; one can't be competitive by leaving too much money on the table.

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Roy_Smith
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Re: Changes in seasonal trends

Jim: My seasonal charts are available on my website, soyroy.com. They go back many years. You can get an idea of how fast they change by comparing the groups of years shown in these charts. It has been too long since my statistics training for me to figure any way of demonstrating the rate of change. Knowing how the charts are made sometimes leads me to forget that some things are not self explanatory and are not easy for others to understand.

 

The soybean seasonal trends have worked very well in the last 12 months as I use them to trade in my spec account. Considering the fact that we are in a much different price environment, six profitable trades out eight is a good average. The really bad time was the calendar year 2008 when the price level shifted dramatically.  That is a situation where money management, options and crop insurange with a harvest price component could have made a big difference in profits. Unfortunately these tools are not cheap so most farmers are reluctant to use them.

 

As prices evolve strategies need to also. I saw the soybean price patterns shifting a few years back. Changing from a mostly pre harvest marketing plan to a storage plan should have been easy, but the old one worked so well! So far there is no sign that the trend is shifting back...Soyroy 

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