It was a relatively quiet month for the advisory services in the Archer Financial Agricultural Hedge Marketing Program, with the biggest change being a reduction in 2011 crop soybean hedges. This month saw those hedge positions reduced by an average 16%.
There was only a slight uptick in corn hedge positions for the 2011 and 2012 crops. The lack of activity could be tied to the anticipation of harvesttime insurance prices set in October. While insurance might have impacted and prevented some from making marketing decisions, with or without insurance, the crop still has to be sold, notes Richard Brock, president of Brock Associates.
"The producer who followed a plan and collected great marketing returns collected the same insurance as his neighbor who did nothing but collect insurance," Brock says.
Cash sales remain the tool of choice for 2011 crops. "Our soybean as well as corn sales [hedges] were all very aggressive in late August/early September," Brock explains. "The reason was that supply-driven bull markets have very high odds of peaking just before harvest is in full swing. Prices were more than $1 per bushel higher than expected. When the market dropped more than $2 in September, conditions were very oversold. Once harvest is complete, bin doors get ‘locked’ and movement of grain dries up, which should lead to a postharvest rally. Thus, we advised putting the profits in the bank."
- November 2011