Trading Agricultural Commodities: Weather, USDA WASDE and Seasonality

Agricultural commodities such as corn, wheat, soybeans, coffee, sugar and cocoa are driven above all by weather and by official estimates of supply and demand, especially the US Department of Agriculture's monthly WASDE report. Prices follow the crop calendar: uncertainty and volatility peak while crops are growing, and harvest often brings supply pressure. Daily price limits and report-day gaps make position size and stop placement even more important than in metals.

The agricultural families

• Grains: corn, wheat (CBOT soft red winter wheat and KC hard red winter wheat), oats and rough rice, traded at CBOT.
• Oilseeds: soybeans, soybean meal and soybean oil at CBOT. Palm oil, important for Pakistan as a major importer, trades on Bursa Malaysia.
• Softs: coffee (arabica), raw sugar (Sugar No. 11), cocoa, cotton and orange juice, traded mainly on ICE Futures U.S.
• Livestock: live cattle, feeder cattle and lean hogs at CME.

Weather markets

Crops are planted, grow and are harvested on a calendar, and weather during the critical weeks decides the size of the harvest.

Crop	Key period	What traders watch
US corn	Planting April to May; pollination in July; harvest September to November	Heat and dryness in July
US soybeans	Pod filling in August	Late-summer rain
US winter wheat	Planted in autumn, harvested in early summer	Winter kill, spring dryness
Brazil soybeans and second-crop corn	Southern hemisphere seasons	Rain in central Brazil
Black Sea wheat	Russia and Ukraine are major exporters	Weather, war, export policy

Brazil is now the world's largest producer and exporter of soybeans, so its weather matters as much as the US Midwest's. Climate patterns such as El Niño and La Niña shift rainfall across the Americas, Asia and Australia and are watched months ahead.

During growing season, prices often build a weather premium when forecasts look dry, and lose it quickly when rain arrives. Traders sometimes say "buy the rumour, sell the rain".

The USDA reports that move grain prices

Report	Frequency and time (New York)	What it shows
WASDE (World Agricultural Supply and Demand Estimates)	Monthly, usually around the 9th to 12th, 12:00 p.m.	Production, use, exports and ending stocks for the US and the world
Crop Progress	Mondays, 4:00 p.m., during the growing season	Planting and harvest progress; crop condition ratings
Prospective Plantings and Acreage	End of March and end of June	Farmers' planting intentions and actual planted area
Grain Stocks	Quarterly	How much grain is in storage
Export Sales	Thursdays, 8:30 a.m.	Weekly US export sales
Cattle on Feed / Hogs and Pigs	Monthly / quarterly	Livestock supply

Report schedules can shift, and US government shutdowns have delayed reports in the past, so check the USDA calendar.

Stocks-to-use: the tightness gauge

The stocks-to-use ratio is ending stocks (what is left at the end of the marketing year) divided by total use. A low ratio means little buffer, so prices must rise to ration demand, and any further supply problem hits harder.

The market reacts to the difference between the report and what traders expected, not to the absolute numbers. Analysts publish their average estimates before each report.

Daily price limits

CBOT grain futures have daily price limits: the maximum the price may move above or below the previous settlement in one day. The limits are reset twice a year based on price levels, and after a limit close they can expand for the next session. Livestock futures also have limits. Rules differ by contract and change, so check the exchange's current figures.

When the price hits the limit and stays there, the market is locked limit: trading may only happen at or inside the limit, and if nobody will trade there, nothing trades. A trader on the wrong side can be stuck for a day or more, and a stop order cannot be filled until trading resumes.

Seasonality in grains

Corn and soybeans often come under pressure around harvest, when farmers sell newly harvested crop, but this is a tendency, not a rule; a short crop can make prices rise into harvest. Old crop (grain already in storage) and new crop (grain still growing) contracts can trade at very different prices. Seasonal patterns are covered critically in the lesson on seasonality and news risk.

Softs: concentrated supply

Many softs come from a few regions, so a local problem becomes a global price shock:

• Cocoa: most of the world's supply comes from West Africa, mainly Côte d'Ivoire and Ghana. Poor harvests there helped cocoa prices more than triple between early 2023 and 2024.
• Coffee: Brazil and Vietnam are the largest producers; a frost in Brazil's growing regions can move prices sharply.
• Sugar: Brazil and India dominate, and Brazilian mills can switch cane between sugar and ethanol depending on prices.

Practical rules for trading agriculture

• Keep a report calendar and avoid full size before WASDE, Acreage and Grain Stocks days.
• Trade the most active contract month; check volume before entering.
• Remember grain trading hours are shorter than energy and metals (covered in lesson 4).
• Size by ATR, allowing for gaps and limits.