Market Outlook: Soybean Hedges Advance for 2012 Crop

October 6, 2012 03:16 PM
Market Outlook: Soybean Hedges Advance for 2012 Crop

Trading centers on unwinding re-ownership positions

Marketing activity has slowed as advisers wait for further evidence of the size of the corn and soybean crops. Most trading has been centered on unwinding re-ownership positions and   sprinkling in cash sales.

"Based on the recent corn report, I have futures currently bought and a ratio call spread for re-ownership," notes Bryan Doherty, senior market adviser for Stewart-Peterson. Both strategies
are aggressive but warranted, he adds, given the poor quality of the crop and lack of carry.

"Grain supplies will remain tight, and those who don’t sell will store for higher prices," Doherty notes. "Rather than buy a call at these high levels, we like the futures or ratio call spread [bought in June] to mimic increases in corn prices just as if it was in the bin."

Look to 2013. The 2011 crop marketing year is over, which shifts attention to marketing 2013 production, says Scott Harms of Archer Financial Services. Overall, soybean hedges for the 2012 crop advanced a mere 5% in the past month for the advisers who are included in Archer’s Agricultural Hedge Marketing Program. Mean-while, 2012 crop corn hedges were actually reduced by 11% by lifting hedge coverage and using futures and options to re-own sales.

Average corn sales for the 2013 crop are at 22% while 2013 crop soybean sales are at 13%. There continues to be little interest in aggressively marketing production beyond the current marketing year, although one advisory service has aggressive hedges in place through the 2015 marketing year.


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