Posted by: usset001 | March 19, 2010

Marketing Plan(s) Update for Soybeans

I will continue with my marketing plan updates. Yesterday the topic was corn. Today I talk soybeans. 

Soybeans 2009 Post-harvest: When you decide to sell your soybean production at harvest, there really isn’t much to talk about. My post-harvest marketing plan for soybeans was posted in late October. At that time, cash soybean prices were about $9.70 per bushel. Cash prices in southern Minnesota reached a high of about $10 in late December/early January (sigh, I never sell the high). Prices crashed in January, reaching a low of nearly $8.50 per bushel in early February. The cash price is currently hovering around the $9 mark. Hindsight says the harvest sale was wise – this looks like one of those 1 in 4 years when the spring price of soybeans is lower than the harvest price.

Soybeans 2010 Pre-harvest: I posted my 2010 pre-harvest marketing plan for soybeans one day after my corn plan in early June of last year. At that time, I made two sales with Nov’10 futures at the $9.99 mark. I made two more sales in early January, with Nov’10 futures trading at $10.20. Today, I have about 40% of my expected 2010 crop priced, about 75 cents higher then the current market (Nov’10 currently trading @ $9.35 per bushel). 

I feel good about my position in soybeans. Last years crop is sold at a favorable price and I have a good start on the 2010 crop. Now I’m looking for (hoping for?) a strong spring rally to give me the opportunity to reach pre-harvest sales of 75% of my expected crop.


Responses

  1. I’m curious what made you price the 2nd 2,500 bushel increment at $10.20 futures on January 4th (given that it doesn’t meet the rules of your marketing plan)? Is it because of the fact that you hedged via futures and the 5,000 bu. contract size?

    • Exactly. Futures contracts are 5,000 bushels per. I didn’t have to use a futures contract, but I prefer them to forward contracts and hedge-to-arrive contracts. But to use a futures contract, I had to adapt the plan. That’s OK – the purpose of my marketing pland is to get producers to think about these subtle nuances in implementing a plan.

      I put a lot of thought into these plans but they are not perfect and they should never be treated like they are set in stone. We need to be adaptable.


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