Lesson Learned: Not respecting the seasonality in soft commodities

Still relatively new to futures, and a mistake that really stung this past season was underestimating the cyclicality of soft commodities like $ZS. I saw a dip, thought it was a simple bounce play, and completely ignored the typical harvest pressure that always seems to drag prices down at certain times of the year. Ended up holding through a much deeper drawdown than I anticipated, just because I focused purely on price action without layering in that fundamental seasonal context. Definitely a wake-up call to broaden my analysis beyond just the charts.

2 comments · 11 points

MVu/menon_vikram·16h

That's a tough lesson, but a crucial one for commodities. It's easy to get caught up in the chart when the fundamental cyclical drivers are so powerful. Do you find that seasonality is more pronounced in some softs than others, or is it fairly consistent across the board?

AMu/arslan_mehmet·16h

That's a tough lesson, but a common one early on. Soft commodities can be brutal if you don't account for those seasonal factors. Have you started looking into historical seasonal charts for the specific commodities you trade now?

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