Pricing 2014 soybeans. Is it time to get aggressive?

My pre-harvest marketing plans for corn and soybeans don’t start until after the first of the new year, but special circumstances call for early action pricing 2014 soybeans. Let me explain.

In my last post, I noted that new crop soybean prices (Nov’14 futures) were at a very favorable level relative to new crop corn prices (Dec’14 futures). So favorable, in fact, that I think it is reasonable to assume a large increase in soybean acres next year. More acres leads to greater supplies, which could lead (again, see my last post here) to much lower soybean prices by harvest in 2014. Despite this outlook, Nov’14 futures prices are currently at a profitable level, relative to production costs.

Corn prices are in the tank. Wheat prices are establishing life-of-contract lows nearly every day. New crop pricing opportunities in corn and wheat are well-below production cost, which means I am averse to pricing 2014 corn or wheat. Soybeans are a different story. New crop Nov’14 futures are trading at and modestly above production costs and  minimum price objectives. It is possible that early soybean sales will be my only opportunity to price any new crop grain before the harvest of 2014. I choose to be 40% priced on 2014 soybeans (you can find my pre-harvest marketing plans here).

One of two scenarios could play out between now and next harvest. One outcome is soybean prices collapse and join the bear market party currently hosted by corn and wheat. If this happens, I will be happy that I chose to pick up the pace on early sales of soybeans. The other possibility is higher grain  prices next fall (driven by… a poor crop? great demand? something else?). If soybean prices increase $2/bu. or more between now and harvest, my early and aggressive sales of soybeans will not look very wise. On the other hand, corn and wheat prices would also be higher, and that’s all good, as I have nothing priced for 2014.

Early sales of soybeans might be viewed as a hedge for the whole farm. Food for thought.