Market Advisor: Crop Producers Can Benefit from Updated Seasonal Price Patterns

by George Flaskerud, Crops Economist
NDSU Extension Service

The latest in seasonal price patterns for crops in North Dakota is presented in North Dakota State University Extension Service Publication EB-61. This publication was released in December 2000 and is an updated version of the publication released in August 1993. The publication presents seasonal patterns for cash and futures prices for a number of commodities with different levels of new crop supplies.

Seasonal price movements will vary depending on supply and demand fundamentals. While crop prices in the cash and futures markets are usually the lowest near harvest and the highest near the end of the marketing year, deviations of actual from expected supplies can have a pronounced impact on seasonal price patterns.

Using these price patterns as a guide for developing a marketing plan is examined in the first part of the publication. Several steps are involved. Supply and demand fundamentals are used to determine an expected seasonal average price. A distribution of prices during the marketing year is forecast with the help of seasonal price indexes. Price objectives are determined, keeping storage costs in mind. Those times of the year when prices are usually the highest for various supply situations are used as time deadlines for selling a percentage of the crop.

The analysis is described in the second part of the publication. Calendar years were classified according to whether new crop supplies were actually smaller or larger than expected at the time of planting. Situations in closely related markets were incorporated into the classifications.

The price patterns tended to deviate considerably from the usual pattern during "short" or "large" crop years, according to the seasonal price patterns presented in part three. Prices tended to peak later than usual during "short" crop years and earlier during "large" crop years.

The results indicated that seasonal price patterns can be used as a guide for developing a marketing plan when they are examined along with supply and demand information and other marketing concepts. Examples are presented in part four.

Extension Service Publication EB-61 can be obtained from county offices of the NDSU Extension Service or from the Distribution Center, NDSU Extension Service, Fargo, ND 58105.

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Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu