Labor Day marks the beginning of fall, with new crop marketing years set to begin and harvest on the way – not to mention a presidential election. Whether it’s football, politics or the markets, the preseason is over. No more exhibition games, conventions or low-volume summer trading – it’s time for the real deal.

Unfortunately, for both LaSalle Street and Wall Street, that means lower prices into October on average. And perhaps longer until markets gain traction. The election adds another layer of risk. Markets face additional uncertainty this year over tariffs, taxes and trade, and policy impacts from these will take months to play out after ballots are counted.

October surprise

Fall is already a vulnerable time for seasonal trends in corn, soybeans and stock prices. Grain markets tend to be weak into harvest because that’s when supplies are usually ample. Campaigns can also feel tremors from an “October Surprise” on Wall Street. The month is famous for stock market swoons – think Black Friday 1929. Don’t forget we also saw big crashes in 1869,1987 and 2008, with other smaller downturns noted.

On average, corn rebounds a little more quickly when both Congress and the White House are up for grabs. On the other hand, soybeans and stocks typically wait for election results before trying to turn the corner. But neither corn nor soybeans or stocks on average get back to September highs in election years before sleigh bells ring for Christmas. Odds for big gains are fairly low, and that includes the usual Santa Claus rally in the stock market.

Corn’s history of rebounding first in election years defies its normal pattern, which sees the nearby contract grind steadily lower on average into December deliveries. Low prices as corn comes out of the field are required to make sure the crop gets tucked away safely into storage until needed by end users.

Corn export demand in particular tends to be spread out over the September-August marketing year, while U.S. soybean sales are front-loaded in the first half of the marketing year. U.S. soybeans fill the shipping pipeline first in the fall, satisfying the world’s needs until the harvest in South America kicks into gear during winter in the northern hemisphere.

So why does corn lead this market trio in election years? To be sure, some of these years saw good corn gains in the last quarter of the year, including 2000 and 2020. Avoiding big losses may also be a factor, because stocks and soybeans don’t often fall gently. Sometimes, they really crater.

Rally odds fade

So far in 2024, corn and soybeans are following averages seen in years with “normal” yields. Both November and December contracts topped in May on planting uncertainty. Since then, they grinded lower with no serious weather threats emerging.

Average prices for corn and soybeans tend to bottom in the first week of October. The worst of the downturns tends to be over by the third week of September. At that point corn has only a one-in-four chance of being higher than Sept. 1, while the odds for soybeans are closer to 50-50.

Both markets tend to break hard into August, when USDA traditionally releases its first estimates of production based on surveys of farmers and their fields. The stock market lacks this type of singular fundamental force to drive its movements. Investors instead focus on the Zeitgeist of the moment. As we know, this summer interest rates and corporate earnings drive the conversation, but that could change quickly.

Federal Reserve Chairman Jerome Powell confirmed the start of an easing cycle in his speech Friday at the Kansas City Fed’s annual Jackson Hole, Wyoming, conference. The central bank will digest the August jobs report due Sept. 6 and then, at the conclusion of its two-day meeting Sept. 17 and18, is widely expected to cut interest rates for the first time in five years. Betting on Federal Funds futures predicts a one-quarter of 1% drop in short-term rates from the current 5.375% average by a 2-to-1 margin over a larger half-point reduction. A full 1% in total cuts is expected by the end of the year.

And, if you’re keeping score, the college season, of course, is already underway. The NFL season kicks off first Sept. 5. Check your local listings for times of the AFL Championship game rematch between the Ravens and Chiefs.