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World Crop Cycles and Seasonality of Markets

Matthew Lange
Educational Opportunities: 
Grain, Young, Beginning Farmers
Home > Education & Events > June 2017 > World Crop Cycles and Seasonality of Markets

This spring farmers in the Midwest continued planting progress in between rains. Conversely, harvest is on the minds of many others this time of year. It’s easy to forget that every month of the year something is being harvested around the globe. In the Southern Hemisphere, for example, Brazilian harvest starts in February and goes through April and Argentine harvest usually starts a bit later and ends in May or June. In the Northern Hemispheres, planting and harvesting times in the U.S. and China are the opposite. Essentially, when we are harvesting Brazil and Argentina are planting, and v vice versa. One may ask: Why is this important to us? One answer is the growing cycle’s influence on the price, due to crop seasonality.

Depending on the time of year, corn, soybeans and other commodity crops have trended in similar price moves over the past years. This makes sense when we think about supply and demand here in the U.S. Harvest time is usually when we see "harvest lows,” then there’s typically a post-harvest rally around the winter holidays. History also tells us there is often a spring/summer rally, particularly when there is uncertainty about the coming year’s production. 

World demand for corn and soybeans does not fluctuate much throughout the year. What does change is where the grain originates from. For example, this time of year, our soybean exports typically slow down as countries like Brazil and Argentina finish harvest and have an excess inventory. This excess in inventory drops the price, and the world is supplied with more soybeans from Brazil.

Understanding world crop cycles and seasonality of market prices is important in developing grain marketing/sales plans. Because most of us are very busy in the spring and summer, consider having sell orders in place at your elevator or ethanol plant, so when (and if) the market rallies, you don’t miss out on an opportunity because you are tending to your growing crops. Along with having orders in place, it’s important to have a written marketing plan in which you can account for seasonal price swing tendency. 

As you move toward the marketing year-end, sales become greater; also note how the plan sells more as the market moves upward. 

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