Seasonality in Commodities

Seasonality is the tendency of some commodity prices and spreads to follow recurring patterns during the year. Crops are planted and harvested on a calendar, heating and cooling demand rises and falls with the weather, and driving and refining follow seasonal cycles. These patterns affect both outright prices and the spreads between contract months. Seasonality gives traders a useful framework, but it is a tendency, not a rule, and weather or policy shocks can overwhelm it.

Why commodities are seasonal#

Grain seasonality#

Northern Hemisphere corn and soybeans are planted in spring and harvested in autumn. A typical pattern:

1. Spring and early summer: uncertainty about planting and weather can add a "weather premium" to prices.
2. July and August: pollination and pod setting are critical; weather scares can spike prices.
3. Harvest (September to November): new supply arrives, and prices often reach seasonal lows ("harvest lows").

South American crops, especially Brazilian and Argentine soybeans, follow the opposite calendar, which partly offsets these patterns in global markets. See Corn and Soybeans.

Energy seasonality#

• Natural gas: storage builds from April to October (injection season) and draws from November to March (withdrawal season). Winter contracts usually trade at a premium to summer contracts. See Natural Gas.
• Gasoline: RBOB futures often strengthen into spring as refiners switch to summer blends ahead of the driving season. See Gasoline and Heating Oil.
• Heating oil: demand peaks in winter, especially in the US Northeast.

Seasonality in spreads#

Seasonal patterns are often stronger in spreads than in outright prices.

Measuring seasonality#

1. Collect many years of data, ideally 10 to 20 or more, using continuous or specific contract months. See Continuous Futures and Back-Adjustment.
2. Average the price path through the year, often normalised to the same starting point.
3. Count how often the pattern occurred, not just the average move.
4. Check the reason: seasonal patterns backed by real supply and demand cycles are more reliable than random calendar quirks.

When seasonality fails#

• Weather extremes: droughts, floods and heat waves break normal patterns, as in the 2012 US drought that sent corn to record highs.
• Policy shocks: export bans or biofuel mandates.
• Macro and dollar moves.
• Changing structure: shale gas, LNG exports and new production regions alter seasonal patterns over time.

Frequently asked questions#

What is seasonality in commodities?#

The tendency for commodity prices or spreads to follow recurring patterns during the year, driven by weather, crop cycles and seasonal demand.

Which commodities are most seasonal?#

Natural gas, grains such as corn and soybeans, gasoline and heating oil show some of the clearest seasonal patterns.

Can you trade seasonality reliably?#

Seasonal tendencies can help, but they often fail when weather, policy or market structure changes, so they should be combined with fundamentals and risk control.

Next, learn how storage shapes prices in Storage and Inventories.