So Where Do We Go From Here?

Things can only get better in February, surely. Can't they? Well, that all depends, it certainly seems a nailed-on certainty that soybean production in South America will be setting new records this year. It is worth noting however that there is a well documented strong seasonal tendency for CBOT soybeans and corn to bottom in the spring, frequently in February - the so-called "John Deere low" or "February break".

You can see a wide range of seasonal charts on Spectrum Commodities website here.

Of course things are rarely quite as simple as all that, and there are numerous other factors that come into play in any one year. However, as it happens soybeans followed this classic trend astonishingly well in 2009. Here's a chart for March 10 CBOT beans, with the classic peaks and troughs highlighted:



It has to be noted how close 2009 was to fitting the archetypal "normal" year for soybeans.

Unfortunately in the case of CBOT wheat the classic trend at this time of year is still downwards as spring planting gets underway (which is expected to increase in the US this year). Here a May/June low frequently occurs as harvesting of winter wheat gets underway, before a secondary August low hits as the combines get in amongst the spring wheat.

In 2009 CBOT wheat didn't follow the classic trend as closely as soybeans, completely missing out the early summer low entirely. This can be attributed to the unseasonably cold and wet spring last year. An April freeze damaged winter wheat crops in southern States, whilst spring wheat planting was severely delayed by heavy rains in the north. It was also around this time that Egypt temporarily threw it's Russian toys out of the pram with regards "quality issues". Here's how March 10 CBOT wheat performed in 2009:



Ignore the early summer low that never happened and that mirrors a classic year for wheat quite well too.

"If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience" - George Bernard Shaw