Posted by: usset001 | September 22, 2011

Pricing (not) of 2012 soybeans

September has not been kind to grain prices, with today’s price action rubbing salt in the wound. The term “crash and burn” comes to mind.

I like to be proactive in pricing decisions, an approach that works best in flat or bear markets. Proactive pricing has a weak spot – it is an approach that leaves you with the “too early and too cheap” feeling in bull markets. Grain markets have been in the bull mode since June of last year.

To combat the “too early and too cheap” feeling, I’ve been counseling patience, even in the face of good pricing opportunities. As early as February 2011, I started commenting on opportunities to price 2012 corn, soybeans and wheat (No, I won’t talk about 2013. Do you know what your fertilizer costs will be in 2013?). Even though prices were attractive, I dragged my feet on taking action.

In early July, I finally priced some 2012 corn at $6.14 per bushel in the Dec’12 contract. Prices in the Dec’12 contract reached another 50 cents higher by late August, but currently trade close to $6.00.

In the third week of August, I took aim at pricing 2012 spring wheat. There has been no sideways trading in the wheat market since last spring – prices are either surging higher (April/May), collapsing ($2 per bushel in June), surging again (July/August), or collapsing again (this month). After passing up the chance to price 2012 at $9.50 or better in May, I was simply relieved to get another chance at $9 in late August. Prices are trading below $8 today.

Which brings me to the sad tale of soybeans. One year ago, the Nov’12 contract was trading at about $10 per bushel. By February of this year prices had reached $12.50 per bushel and my interest was piqued (patience). They were over $13 when I started pricing corn in July (drag your feet). They were about $13.50 when I finally pulled the trigger in spring wheat (slow down). I can’t say exactly why, but I had my mind set on $14 soybeans (Nov’12 contract).

Two weeks ago the Nov’12 contract closed at $13.995 per bushel. I was paying attention and I thought about it, but I passed. I needed a lousy 1/2 cent more. The market is currently trading at $12.85.

Sigh. Give me one more shot at that $13.50 mark and I will get things going.


Responses

  1. […] September I posted a lament over my lack of early action in pricing 2012 soybeans. In early July I took action to start pricing 2012 corn. In August I stepped up and started pricing […]


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