Grain marketing: How price history can guide better sales decisions

Grain marketing can feel like guesswork, but it doesn’t have to.

Historical price patterns offer growers a measurable way to improve returns without relying on long-range forecasts.

That was the message from grain analyst Chuck Penner in a recent Roots to Results webinar hosted by Manitoba Crop Alliance. After nearly three decades in the business, his advice is simple: stop trying to predict the future and start working with the odds.

He calls it “planning without prediction.”

Why it Matters: Understanding seasonal price patterns helps farmers approach marketing with more clarity.

Penner compares grain marketing to gambling. In blackjack, professional players win not because they can see the future, but because they know the odds and make disciplined decisions. Grain markets have their own version of that playbook.

Supply and demand constantly push prices above and below their long-term balance. Strong prices usually bring more production; weak prices often lead to acres shifting elsewhere, and over time, markets tend to settle back toward the middle. It’s what economists call “reversion to the mean.”

Layered on top is a pattern farmers see every year: seasonality. Bids behave differently at harvest than in late spring. Rail freight and cash bids follow their own seasonal rhythm. These patterns aren’t perfect, but they repeat often enough to matter.

“The goal isn’t to be right 100 per cent of the time,” Penner said.

“People are terrible at predicting things. Sometimes we guess right, but it’s not a great marketing strategy.”

To demonstrate, Penner dug into Prairie hard red spring wheat bids back to 2012, the first year after the end of the Canadian Wheat Board’s single desk. Averaging those years shows a consistent pattern: wheat tends to bottom at harvest, rally into a smaller November peak and then reach a stronger seasonal high around mid-May.

Penner then looked at the last nine years and asked what usually happens after the harvest low. In all nine years, prices were higher by the end of October.

“It’s called a seasonal low for a reason,” he said.

Across those nine years, the average gain from the September low to late October was 83 cents a bushel (about 11 per cent). By the seasonal high in May, the average difference from the harvest low was $1.31 a bu.

For context, Penner noted that on a 5,000-acre farm at 40 bu. per acre, even 10 cents amounts to roughly $20,000. A 50 cent swing is closer to $100,000.

Penner also compared different sales strategies using past wheat prices. He tested three approaches:

• Selling 100 per cent of the crop in the seasonal-high month.
• Selling equal tonnes every month.
• Selling in four cash-flow windows (late October, December, March and June).

In nine of the last 12 years, the seasonal-high month would have produced the best price. It was the worst option in two years and middle-ranked once. His point wasn’t that anyone should sell everything in May; it was that shifting some sales toward those seasonal-high months tends to improve results over time.

He ran the same exercise using a mixed farm that included peas, flax, wheat, oats, canola, soybeans and feed barley. Across nine years, selling each crop in its seasonal-high month outperformed equal monthly sales by roughly $100,000 per year on average and topped the four-sale cash-flow approach by about $90,000 per year.

Penner stressed that these figures are not guaranteed year to year. His nine-year sample included two exceptional rally seasons that boosted the averages, and a different decade could look more modest. The long-term tendency still favours seasonal highs, but the size of the advantage varies year to year.

January trap

Those same seasonal price patterns, or “seasonals,” also show up in new-crop contracts. Penner examined six years of Prairie new-crop wheat bids and found the weakest weeks, on average, were in January. The strongest tended to occur in May and June.

He saw a similar trend in many other crops. The spread between spot and new-crop bids usually widens early in the year and then narrows as seeding and growing conditions come into focus.

The takeaway wasn’t to avoid forward contracting entirely but to be careful about locking in large volumes in January simply for the sake of having something priced.

“Seasonals aren’t perfect, but they give you better odds,” he said.

Not every decision involves a whole marketing year. Sometimes it comes down to whether there’s much difference between selling now or in a few weeks.

Penner’s short-term analysis shows that in the weeks following the typical seasonal low for red spring wheat, the average change over the next four to 12 weeks has been small. In many years, selling immediately or waiting a month has not produced a major difference.

Rail freight adds another layer.

Data from Quorum Corp. show freight rates on key Prairie corridors tend to rise into fall and decline again in spring. The swing can be $12 to $20 per tonne between the seasonal high and low, and those changes flow through to cash bids. When freight softens in spring, bids often improve, making spring a more favourable window for catch-up sales.

Seasonals are built from history, and they work best when markets are relatively balanced. They’re less reliable when trade disruptions change normal behaviour.

Penner pointed to 2018-19 and 2022-23 — years when prices were generally trending lower — as examples where waiting for seasonal highs did not pay. Trade disruptions can also override typical patterns.

Peas are one example: Indian tariffs in 2017, followed shortly by Chinese trade restrictions, pushed yellow pea prices below their harvest lows and kept them there for long stretches.

Export patterns can shift seasonality as well. Flax once showed strong fall and spring peaks linked to European demand through Thunder Bay. With more exports now flowing to the United States, the pattern looks different.

Because of these exceptions, Penner highlighted the need to think in terms of probabilities, not guarantees. When prices follow the usual script, seasonals are useful. When they don’t, he suggested leaning more on other decision-making tools such as profitability, stronger local bids and cash-flow requirements.

If a crop struggles to rally off harvest lows, that may call for a more defensive approach. If prices refuse to break lower when they typically would, that may be a sign to reward the market.

Farmers don’t have to become full-time market trackers. A basic understanding of seasonal price behaviour, some sense of where today’s bids sit within the past decade and a few practical rules of thumb can improve results without adding major workload, said Penner.

He also acknowledges that a farmer’s intuition can play a role.

“There’s still room for gut instinct … just don’t bet everything on it.”