Posted by: usset001 | November 11, 2009

2009 Soybean Post-Harvest Marketing Plan

soybeansiconMy post-harvest strategy for soybeans this year is straightforward; sell every bushel at harvest. You can find a written version of my post-harvest plan here.

Here’s my thought process. First, there is no carry in the market and, therefor, no market incentive to store grain. Second, the harvest basis is very good, 30-40 cents under the November contract in many parts of Southern Minnesota and Northern Iowa (and we should be thrilled that the 100-150 cents under stuff of recent years is gone). Finally, I was an aggressive in pricing soybeans before harvest. I estimate an average cash price of $10.50 per bushel for the 2009 crop.

What about my “upside” potential after harvest. At-the-money July calls will cost close to $1 per bushel. I prefer to play it conservative and keep my money. Besides, I have a 2010 pre-harvest marketing plan in place – I’m hoping for a strong rally in the months ahead so I can move forward with more pricing of the 2010 crop.

Followers of my celebrity producers know that, at harvest, I like to ask, “What would Earl do?”  Earl Eitheror is my celebrity producer who makea simple choice at harvest. If carring charges are large, he stores grain on-farm and sells the carry in the market. If carrying charges are small (like this year in soybeans), Earl holds unpriced grain in storage for sale in the month of May. I respect Earls performance over time, but I reserve my right to use judgment and consider my own appetite for risk. I say good luck to Earl with unpriced soybeans in the bin, but I choose a different direction.

I will be posting my plans for corn after harvest within the next week.

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