Soybean prices are at 3 1/2 to 4 year lows with a projected record U.S. crop on the way.
Chip Nellinger, Blue Reef Agri-Marketing, says marketing in this low price environment is tough for new crop and the few remaining old crop bushels farmers still own.
For old crop he says, “I don’t think you have a lot of time to do this before harvest but there may be some basis pushes out there to be had if it’s a situation where we need to make room and get these sales made of old crop.”
He emphases there is no one size fits all. “But first and foremost you have to look at where your crop insurance is and it depends on the coverage level you take but just do a review of your crop insurance and figure out where is your guarantee?” he says.
Although its difficult to predict he says farmers need to take what their projected soybean yields are out in the field right now and divide it back into their crop insurance guarantee.
“And that will tell you what price level beans have to be in order to kick in a crop insurance premium. It might be you find out that its far below the level that we’re currently trading,” he explains.
If that is the case he advises deciding if you can store soybeans to capture the carry in the market.
Nellinger says producers also need to consider what the basis is in their area.
“So as you go to harvest the crop don’t get complacent. If your yields are big enough with the carry in the market that yield could actually get you closer to revenue you need,” he says.
The only way to capture the carry or higher prices in the deferred contracts is to either make a forward sale in December through March or beyond.
Or you can make a Hedge to Arrive sale, which is setting the futures price right now and waiting until later to set the basis.
