Soybeans have a clear historical tendency during harvest season
Key Points
- Soybeans are about to enter a seasonal period of historically consistent price weakness
- 2025 could certainly be an exception to the bearish rule, but a trader needs a solid reason to risk holding a long position in beans during the upcoming seasonally weak period
- Aggressive traders should continue to look for opportunities to press the short side
Why soybean seasonality tends to persist
Each year, as soybean harvesting season begins in the U.S. Midwest, little doubt remains about the state of the crop harvest. It is either good, bad, or somewhere in between, but the critical point is that the state of the crop harvest is typically a known quantity. As a result, whatever risk premium has been built in is usually shed during this September/early October period.
To understand this hedge unwinding, the chart below displays the annual seasonal trend for soybean futures. As you can see, beans are about to enter another period of typical price weakness that extends from the close on Trading Day of the Year (TDY) #176 through TDY #191. For 2025, this period extends from the close of September 15th through October 6th.
The chart below displays the cumulative $ +(-) for soybean futures held long only during Trading Day of Year #176 through TDY #191 since 1937.
The table below summarizes soybean performance only during this period, starting in 1937.
Seasonality tends to be most meaningful when price trends and seasonal trends align. In other words, if the price is in a downtrend when seasonality says it "should" be in a downtrend, that typically tends to be a good time for traders to press their advantage. The chart below shows that soybeans have traded sideways for over a year, from roughly 938 to 1075. For now, the key thing to note is that price is below its 70-day exponential moving average - i.e., in a downtrend. As long as price holds below this average, we would look for a further move to the downside.
The chart below compares soybean's annual seasonal trend to actual price action so far this year.
What the research tells us…
The standard seasonality caveat applies: In any given year, anything can happen. Still, over the past eighty-seven years, in roughly two out of every three years, soybeans decline in price as the fall harvest season approaches. In addition, the losing years tend to be significantly greater than the winning years regarding dollar price movements. A trader must have a solid reason to consider holding a long position during this period. Likewise, speculators willing to play the short appear to have a substantial historical "edge" in their favor.