Merry Christmas, everyone!
As we wrap up the year, I want to take a moment to wish you and your family a joyful holiday season.
Whether you’re spending today trading, relaxing, or eating one too many Christmas cookies, I hope it’s a good one.
Now, since it’s the season for giving, let me share something the markets and the holidays have in common: they both run on seasons!
Just like we know Christmas comes with tree decorating, gift giving, and questionable fruitcakes, commodities follow their own predictable cycles.
And understanding those seasonal patterns can make a big difference when you’re trading. Let me show you how.
The Rhythm of Planting and Harvesting
Take grains, for example. Corn and soybeans are fall crops, so spring planting and fall harvest seasons play huge roles in these markets.
Every year, I’m watching reports on planting progress in the spring. Can farmers get in the fields on time, or is it too wet?
A few years back, it was so rainy that farmers couldn’t get their crops in the ground until much later than usual. That delayed planting had ripple effects on the entire market.
Then there’s harvest season. During this time, prices tend to bottom out because there’s an abundance of supply hitting the market.
We call these the “harvest lows.” Think of it as the Black Friday of commodities — plenty of supply, and everyone’s scrambling to sell.
Wheat’s a little different. We have “winter wheat,” which is planted in the fall, goes dormant through the winter, and is harvested in the summer
So, with wheat, I’m keeping an eye on weather conditions not just during the growing season but also while the crops are sitting dormant, like they’re in their own little Christmas hibernation.
Crude Oil and the Driving Season
Crude oil has its own seasonal rhythm, tied closely to the driving season. In the spring, refineries switch from producing winter gasoline to summer gasoline.
This changeover, combined with maintenance shutdowns, often tightens supply just as demand starts ramping up for summer travel.
From around February or March through June or July, crude oil and gasoline prices tend to climb.
Once the summer season wraps up, prices often fall back down, only to rise again in the fall as we head toward the colder months. It’s like the seasonal sales you see at the mall — predictable, yet impactful.
Natural Gas in Winter
Natural gas is another commodity with a clear seasonal pattern.
It typically rallies in the winter because of increased heating demand during those cold months.
People need to stay warm, and that demand drives prices up.
As we head into late winter and spring, though, demand tapers off, and prices usually come down again. It’s like the after-Christmas sales — busy while it lasts, but it cools down quickly.
Why This Matters
Understanding these seasonal trends helps me prepare for market moves and align my trades with the natural rhythm of supply and demand.
It’s not just about knowing when prices tend to rise or fall — it’s about knowing why. Factors like weather, planting progress, refinery maintenance, and even global events all play a role.
If you’re trading commodities, take the time to understand the seasonal cycles behind each market. Trust me, it’ll help you make smarter, more informed decisions.
Have a Merry Christmas, and here’s to a prosperous New Year ahead!
— Geof Smith
P.S. Speaking of the New Year, I’m going into 2025 strong with one of the most consistent strategies I trade. Check out my top plan for 2025 trading right here!
