Grain markets offer profit opportunities due to the seasonal
nature of their planting, crop development and harvesting
cycle. During certain times of the year, the price of the grain crops are especially vulnerable due to these seasonal tendencies.
Here are some trading strategies based on seasonal
spread trading, using a trend-following method to filter
Seasonal analysis is comparable to
any other analytical method; we
assume that future price movement
will be similar to past price
movement. When working with
seasonal analysis, you review past
price behavior within the frame-work
of seasons or some other
time element. Identify any recurring
patterns and then anticipate
that future price action will follow the historical patterns.
Of course, all analysis, be it technical or fundamental, rests on using past measurements to predict future market behavior. Fundamental analysts — grain analysts, for example — base their forecasts on a number of historical fundamentals, including past crop sizes, yields and traditional demand
levels. Using simple logic, if this year’s crop carryover is
larger than last year’s, a bearish prediction could be made.