Posted by: usset001 | December 15, 2010

Plan Updates: Post-Harvest Marketing of 2010 Soybeans

In the first week of October, soybean futures were on the rise (Nov’10 @ $10.65), basis was very weak (95 cents under the Nov) and carrying charges were positive but small (about 18 cents from Nov’10 to Mar’11). In my post-harvest marketing plan for soybeans, I chose to sell the carry, simply as a way to buy time for a better basis in the early months of 2011.

What’s happened since I wrote the plan two months ago? Futures boomed, with the Jul’11 contract up more than $2 per bushel in the past 9 weeks. Demand remains strong but I sense a little more divergence of opinion for the direction of soybean prices over the next 6 months. Commodity bulls are many, but look hard and you will find a few soybean bears too.

Like corn, the soybean basis has narrowed sharply since harvest. Basis levels of 100 cents under the Nov were very common throughout Southern Minnesota at harvest. Today, 60 cents under the Jan’11 contract are common. Selling a modest carry at harvest prevented me from enjoying the last $2 of higher prices, but basis is cooperating and that end of my plan is working well. As written in early October, I set my sights on a basis of 70 cents under the Mar’11 contract in  early 2011 – I suspect I will do as much as 20 cents better.

For farmers who are holding unpriced soybeans, I say “good job!” Once again, I took a more conservative “sell the carry” approach and it is working well.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: