Posted by: usset001 | June 10, 2009

Soybeans: 2010 pre-harvest marketing plan

soybeansrawOn Monday I completed the execution of my 2009 pre-harvest marketing plan for soybeans. The official start of summer is still 11 days ahead of us and I have about 75% of my 2009 soybean crop priced at a weighted average price of $11.18 per bushel, Nov’09 futures. This is a good price, but I hope that prices continue their upward trend – I would rather sell the remaining 25% for $13 rather than $8 per bushel.

2010 is on my radar, and it should be on yours too. Nov’10 soybean futures closed just shy of the $10 mark on June 9. Assuming a basis of 70 cents under at harvest, I can start pricing 2010 soybeans at a cash price of $9.30 per bushel. Earlier this week I worked through a cost of production analysis on FINBIN and estimated my 2010 soybean COP at about $8.35 per bushel (Southern Minnesota figures, assumes an average yield of 50 bu./acre). I went back 10 years with FINBIN COP figures and compared them to early pricing opportunities – the chance to lock-in a margin of nearly $1 per bushel in soybeans is not common. I consider this a great place to start.

Should we look beyond 2010, to 2011 or 2012? (Yes – the Nov’12 contract started trading earlier this week) I am reluctant to price more than two years out. What will be by rotation needs in 2011? What will fertilizer, seed and rent cost in 2012? What changes are ahead for farm programs? Too many questions make me gun shy about getting too aggressive, too early.

The wild prices of a year ago may mess up our thinking for years to come. The margins in grain production a year ago were off the chart. Based on today’s pricing opportunities for 2010 and implied production costs, margins are very good – but not off the chart. I’m not waiting for “off the chart” to take action.

My 2010 pre-harvest marketing plan for soybeans will be posted by the end of the day. My minimum price objective for sales is a cash price of $8.35 per bushel, or $9.05 Nov’10 futures. Even with an early sale premium, prices are high enough to warrant two sales for 2010, or roughly 20% of my expected crop.

What will your plan look like?

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