Originally published in April 2025’s issue of Energy, Metals and Agriculture Consensus Forecasts. The unabridged article and a recent sample issue are available to industry professionals. Simply send us an email at editors@consensuseconomics.com
Like many other economic variables, energy and metals prices are sometimes judged to be subject to seasonal influences. These could arise from a number of factors, including dependence on industries which are subject to seasonal swings in demand and the annual weather cycle. In order to identify such patterns (or lack thereof), we have adopted a widely-used statistical approach, known as the X12 ARIMA (Auto Regressive Integrated Moving Average) model. This statistical analysis removes the systematic calendar-related trend of an individual series and then calculates the residual seasonal effect. Examining end-month spot price data from the period January 2005 to December 2024, we calculated seasonal factors for seventeen major commodities, which are shown in the table below. The results measure the average deviation of a commodity from its trend rate at the end of each month over the past 20 years.
The ten charts on the opposite page illustrate the results of our X12 ARIMA study above, with the solid blue line representing the long term 20 year average for the period 2005-2024 and the dotted black line a shorter 10-year average 2015-2024. The recent but perhaps more volatile 10-year average was added to see if traditional patterns of seasonality may have altered in more recent years. Certainly, swings in investor demand and hedge fund activity during earlier boom to bust cycles are likely to have affected the average deviation of some commodities from their underlying trend rates. From a macro perspective, some of the obvious seasonal effects fit closely with expected patterns in both the short and long-term ARIMA results. The upward autumn pressure on Natural Gas spot prices ahead of the winter heating season in North America seems to be apparent (for both the 10- and 20-year measures), as is the climb in RBOB gasoline prices during the summer driving period. Futures prices for the latter, of course, show a similar cyclical pattern of expectations, albeit not for Heating Oil, which appears relatively flat. The seasons also tend to impact the agricultural commodities of Wheat and Corn, with price dips occurring around the time of the summer harvests in the northern and south hemispheres, respectively, when supplies are plentiful. For Nickel, the longer-term X12 ARIMA results suggest stronger prices in January through to May, with declines during the latter part of the year. As a measure of the consistency of the X12 ARIMA average results, we calculate and show below the graphs on the facing page the proportion of months which have absolute rises or declines in the spot price during the 20 year analysis period.
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