Soybeans Comment
Today is the first day of the 45 day period that will make or break Brazil’s soybean crop.
Most years, soybean futures make a low for the year before 10 October (this year 14 August) and then prices firm into the end of the calendar year, trade sideways for two weeks and then down for two or three weeks. Why?
If the majority of Brazil’s beans were planted at the normal time, by January 15th, the market knows the condition of the crop, soil moisture, and the two-week weather forecast. If all is more or less normal, the market knows normal crops produce a good crop and quickly begins to remove the weather premium from the price because the majority of Brazil’s crop will be made by the end of January.
Although nothing is 100% in this business, the second most reliable soybean price trend is a down move during the month of January. The following graph is the average price move for March soybeans the past 6 years and then the specifics by year: