Market Outlook: Soybeans Lead Winter Market Rallies

February 27, 2013 03:32 PM

Some advisers take profits on re-ownership strategies

TP Adviser Track Records

The soybean rally last month was met with extra sales from advisers in the Archer Financial Services, Inc. Ag Hedge Program. "As the soybean market rallied above $1.20 from its January lows, cash sales were advised to reward the late winter strength," says Scott Harms of Archer Financial Services. Some advisers profited on re-ownership strategies.

Soybean sales for the 2012 crop advanced 10% in January to stand at 73% sold, while 2013 sales increased by 4% to 23% hedged. Corn sales increased 5% for 2012 crop and 3% for 2013 crop, to stand at 67% and 38%, respectively. Market conditions to start 2013 are not unlike 2012. New crop corn and soybean prices are similar to last year and the outlook for burdensome carryover this fall sounds familiar to comments a year ago. Corn prices declined nearly $1 from its January 2012 high to its late May 2012 low before initial signs of a drought began to develop.

Adviser service Stewart Peterson encourages hedgers to use a "bear put spread" for new crop corn. "Producers feel the market has the potential to go higher due to drought, says Naomi Blohm of Stewart Peterson. "Therefore, they need a strategy that lets them keep the upside potential in case of a new corn crop price rally this spring/summer, like we saw in June 2012."

Yet, producers are aware of the potential corn acres to be planted this spring. "They need to be in a position that gives them protection in case new crop prices go south," Blohm says. "If the market begins to fall, we’ll be more aggressive with the current strategy, likely adding the notion of selling calls or futures."

If you have any questions or comments regarding the track record information, contact Mark Soderberg, Tim Smith or Scott Harms of Archer Financial Services, Inc., at (800) 933-3996.

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