Canada Markets

Five-Year Average Moves in Old-Crop Futures in May

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This is a look at the average move in old-crop July futures in the month of May over the past five years. The average monthly move for canola of .9% higher was the only one of the selected commodities to average higher in May. The worst response in May is seen in oat futures, which averaged 6.5% lower. (DTN graphic by Nick Scalise)

Is May a good month to sell grains and oilseeds? Of the five commodities looked at on the attached chart, the July canola market was the only market to show an average move higher in the month of May. Over the past five years (2011/12 to 2015/16), the July canola futures contract moved higher over the month of May in three of the five years. This price move ranged from a $24.90/mt loss to a $28.70/mt gain, with the average move being a $4.08/mt or .9% move higher. This is consistent with DTN's Five-Year Seasonal Index, which shows canola reaching a seasonal high in late May/early June. A quick look at the average Prairie basis calculated over the past three years shows canola basis weakening over the month of May in two of the last three years, weakening an average of $3.26/mt over the three years.

The other selected futures markets tend to show weakness in futures trade over the month of May. DTN's Five-Year Seasonal Chart also shows that hard red spring wheat tends to show weakness through late May. Over the past five years, July MGEX futures have finished lower over the month of May in each of the five years. The drop in the July futures ranged from 2 cents to 62 3/4 cents, averaging 25.9 cent or 3.7% drop over the month. Over the past three years, the average Prairie CWRS basis strengthened in two of three years, gaining an average of 18 cents/bu over the three years.

DTN's Five-Year Seasonal Index shows that corn prices tend to drift lower into the month of August. Over the past five years, July corn futures have moved 24.4 cents or 4.3% lower on average over the course of the month of May, ending lower in three of the five years.

DTN's Five-Year Seasonal Index shows that soybean prices tend to move higher through late June, although the July contract tends to lose ground in the month of May. Note that the seasonal index is calculated using the front-month contract, so it follows the May contract until expiry. The July soybean contract lost ground in three of five years over the month of May, losing an average of 33 cents or .8%.

Of the five commodities shown, oat prices show the poorest response in the month of March. The July contract finished 29 cents or 6.5% lower on average, finishing lower over the month in four of the five years in question.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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(CZ)

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