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RSS By: Joe Vaclavik

Joseph Vaclavik is the president at Standard Grain in Chicago. Standard Grain provides futures and options brokerage to farms, feedlots, elevators, processors, end-users and traders. Visit www.standardgrain.com for more information.

 

Risk in the 2014 Soybean Market?

Nov 25, 2013

Marketing grain is not about predicting prices.  It is about managing and identifying risk.  In regard to the November '14 soybean contract, it is possible to paint an extremely bearish scenario.  Without knowing anything about weather or production potential next summer, one must admit that the following scenarios are possible (not necessarily likely):

1) Another record Brazil/Argentina soybean crop

2) Larger soybean acreage in the US 

3) Demand shift away from US beans and toward South American beans

4) Lower corn and wheat prices

 

Many farmers here in the United States plan on planting more beans in 2014, mainly because they're more attractive than corn from a margin standpoint in many cases.  While keeping this post short and sweet, I'd like to emphasize the importance of marketing in regard to next year's bean crop.  While I could just as easily paint a bullish scenario for next year, I don't get hurt as a farmer when prices go up...a 2014 bull market in beans would be fantastic.  Hedge strategies should be explored, especially for those farmers who plan on increasing bean acreage in light of the more attractive margins.  

Nov '14 Soybeans, Daily

ZSX14 ~ Daily 11252013 032011pm

 

Questions or comments?  Email info@standardgrain.com

RISK DISCLAIMER: Trading in futures products entails significant risks of loss which must be understood prior to trading and may not be appropriate for all investors. Please contact your account representative for more information on these risks. Past performance of actual trades or strategies cited herein is not necessarily indicative of future performance.

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