July 11, 2025

Commodity Insight: Glass is half full in bull run

History shows that September is the most bearish month of the year for stocks, as well as commodities. History also shows that October is the second most bearish month of the year for those markets, as well.

This week, September came to an end and October began. It is also the final quarter of 2020, a year without precedent. And there were so many shocks in September that just ended, I for one am not sorry to see it finally fade into history.

Stocks, the Dow and so on in September had their worst single month since March. However, for the quarter as a whole, stocks did quite well.

Viewing the stock market here and now is like the old saw about a “glass being half full or half empty.” The bulls look at stocks for the quarter and are excited because the glass appears to be half full. The bears, on the other hand, looking at just September believe the glass is half empty.

The bulls and bears in the commodity markets found themselves in a similar situation, trying to decide if the glass is half full or half empty at the end of September and going into October.

For instance, in the livestock complex, the U.S. Department of Agriculture released two major reports late in the month. One, a Pig Crop report that is released only twice a year.

The data was clearly bearish, showing the U.S. hog herd having more than a million more hogs than expected. Though the data was statistically bearish, hog prices rallied higher on the news.

The other report was a monthly Cattle on Feed report. It, too, was statistically bearish, but it followed the bullish lead of the hog market and rallied higher, as well.

In other words, in September, a notoriously bearish month, the cattle and hog markets were slapped with statistically bearish data, but prices shrugged the news off and headed higher. And markets that go up on bad news are markets that want to go up.

And then there is the grain complex that appeared to be ultra-bearish for prices because global supplies were viewed as ample to burdensome while U.S. supplies were pegged to be in the same predicament.

All year, it was difficult, at least for me, to build much of a bull case for grains because the world was swimming in grain with few weather issues to change matters.

But then this week the USDA, in a major quarterly report, showed a serious and unexpected decline in ending stocks of corn, wheat and soybeans. As a result, grain prices rose sharply.

Now, as September has faded away, the U.S. ag markets, grains and livestock are in the midst of a bull run, something not seen in some time. Of course, things may change in the period ahead because the data regarding livestock is not bullish and there are many questioning the accuracy of the USDA grain report.

Plus, October has arrived, the second most bearish month of the year, and that, too, may temper the bullish enthusiasm that is suddenly surfaced for the U.S. ag markets.

But allow me to repost a few comments I have made in this column over the past few weeks regarding the commodities per se and in particular the U.S. ag markets:

• “Sometime after the first of the new year, I fully expect commodities, per se, to move considerably higher as the Fed is wishing for. And higher prices will be helped along dramatically by climate change issues in South America and the next growing season in the United States. Bank on it.”

• “I am in the camp that believes the long-term impact of coronavirus will prove to be price positive for commodity values once the new year arrives. This year, commodities are down about 11% from a year ago and far from pricey. The pandemic coupled with the Fed’s desire to spark inflation will likely lead to a period of ‘stagflation’ as seen in the 1970s and 1980s. In such an environment, paper markets languish while hard assets, commodities, head higher. But first we have to get past 2020, a wild and crazy year without precedent.”

Only with the benefit of hindsight will it be known for certain that long-term and lasting lows were posted this year for the U.S. ag markets, grains and livestock.

But if my work is correct, and I believe it to be so, a host of bull markets will be spawned in the new year. Based on what I have witnessed over the past few months, I am pleased to say, and with confidence, for American agriculture the glass is half full.

And please check out the special offer I have for my twice-a-day newsletter. Drop me a line at 406-682-5010. I am quite excited about the new year that is close at hand.

Don’t be left behind. Stay informed.