Investing in Commodities: Seasonal Factors Make Active Management Necessary

Just as the global economy has cycles and economic changes that play an important role in commodity supply and demand, seasonal factors also impact prices. Seasonality involves fundamental reasons behind price movement in different markets.

In this paper, we will demonstrate how the yearly calendar can be used as a guide for some commodity prices as supply and demand change throughout the year, not just in grains, but also in the energy and metals markets.

This paper provides trade examples using seasonal charts as guidance for positioning when taking seasonal factors into consideration. Long-only, indexing, and other passive commodity investing strategies may not address seasonal factors, treating investing in commodities as if they were equities, even though they are very different.

When considering strategies, seasonal trading can help or hinder a portfolio depending on whether one chooses to either actively manage seasonal trades or ignore the fact that seasonal factors exist altogether.

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Kimberly Rios, CFA, CMT, Portfolio Manager
Kimberly Rios, CFA, CMT, Portfolio Manager
Kimberly Rios joined Catalyst Capital Advisors as a Portfolio Manager in 2014. She is currently a Portfolio Manager of an options-based commodity fund at Catalyst Funds. She carries the Series 3 license, the Chartered Financial Analyst (CFA) Designation, the Chartered Market Technician (CMT) designation, and is a member of the National Futures Association. Ms. Rios has degrees in Economics and Finance from the University of Arizona.

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