In some respects, October suffers from middle-child syndrome. September has the thrill of early fall as leaves start to turn. November has the Thanksgiving holiday waiting near the end of the month. Except for the World Series, October is generally viewed as having little to offer. Therefore, it often gets overlooked as a month of any importance.

Maybe that's why I like October. One has to look a little harder for its charms. Midway through fall, the air is colder and walking anywhere has a distinctive crunching sound, making it impossible to creep up on anyone -- important to remember on Halloween night.

From the market's point of view, October has always been a bit of a horror story. Historically, more often than not, major meltdowns in the Dow Jones Industrial Average have occurred during this month, many of them making Ichabod Crane's race with the Headless Horseman seem like a friendly gallop across the pasture between chums.

October has also evolved into a key month in the grain markets. In times long gone when the dynamics of the markets were far different than today, October saw lingering harvest pressure in corn and soybeans, while winter wheat markets posted modest planting-season rallies. But no more, as October is now the month when all three make important bullish turns, building the support for seasonal rallies that tend to last into the next year.

For this discussion I'll use the DTN National Cash Indexes for corn (NCI), soybeans (NSI) and soft red winter wheat (SR). Using the cash indexes rather than the nearby futures contract eliminates the changes that rolling one contract to the next can create, giving a clearer picture of how the intrinsic (cash) value of the grain markets moves over the course of the marketing year.

Naturally, we'll start with corn. The NCI tends to put in a low weekly close the first week of October, equating to about 82% of the average weekly close for the marketing year. Historically, this low didn't use to occur until late December or early January of the following year. After posting this low, corn's national cash average price increases 8% through the first week of November, consolidates through the first week of December, then climbs to a high of 121% of the average marketing year price in mid-June.

This year's cash corn market is well in stride with its seasonal index, posting a low of $5.66 in late September before rallying to its current high of $6.28. This calculates to a gain of about 11%, already showing the October move is running ahead of average.

A similar tendency is seen in soybeans, with the NSI posting a low of 81% the first weekly close in October. From there, the cash soybean market makes an impressive rally that lasts through the first week of July with a weekly close of 115% of the yearly average of weekly closes. This year's weekly low close in the national index of $10.83 occurred on schedule, projecting to a possible high next summer of approximately $14.50.

The soft red winter wheat market is a bit more subtle. The seasonal low tends to occur the previous May, peculiar I know, given that harvest runs from roughly late May through most of July, rallying to an initial high in late September before a quick dip into early October cools things down. From there the SR consolidates through late November before rejoining its uptrend lasting into early February. All told, the move from early October through early February tends to be about 20%.

This year's national cash price for SRW wheat posted a low of $5.64 the first week of October, and true to form, has been consolidating since. If the seasonal index holds, it would imply a fall and winter rally in the cash market that could see the SR reach a high weekly close just shy of $6.80.

While the seasonal indexes are enough to give producers a cheery outlook heading into the long, cold winter, the underlying question is what has happened to cause a shift in the tendencies of the markets. A number of possible answers exist. The most likely, at least to me, is the aforementioned change in the dynamics of the market.

In years gone by the general tendency of the market was to look backwards, using outdated data to set the tone and direction of trade. However, since the floodgates were opened in 2005, allowing the rush of investment money to come pouring in, cash grain traders have had to become more proactive than reactive, looking ahead using private calculations of supply and demand. The influence of long-only investment buying can't be denied, accounting for some of the unflagging seasonal rallies that used to be marked by periodic downturns.

As we near the end of October, the cash grain markets find themselves in the midst of solid rallies. Moves as seasonal as falling leaves.

Darin Newsom can be reached at darin.newsom@telventdtn.com

(AG/SK)

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