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To Sell or Not to Sell?

Speaking specifically to soybeans and starting the process of new-crop sales, it is important to start forward contracts (if you like your current local basis) or consider a hedge-to-arrive (where you lock in an agreed futures price and have to set your basis later) on 10% to 20% of your new crop. Right now, you’re locking in a profit, and if you’ve told your lender that you can pencil in a profit on beans, you should reward this rally and pull the trigger! The fear may be, “Well, I sold early last year and the market rallied $1.00. I felt frustrated for selling too soon!” That is a real feeling for sure, but please do remember you can reown that cash sale with an option strategy to still let you take part of a rally higher.

There are so many factors to watch this year regarding marketing that you have to be on your toes! What happens if the weather in South America suddenly turns perfect and the only South American weather drama the market reacts to is what already happened in the past two weeks? Or, what happens if the new administration suddenly creates a dramatic policy that sinks export demand? Nearly HALF the beans grown in this country are exported! If exports are suddenly turned off, then we will REALLY have a big domestic supply on our hands. I don’t think it would happen, but you always need to be mindful of any scenario that could possibly make the market turn higher or lower. This way you’re prepared for anything that this market throws at us.

Lastly, print off the chart below and tape it to your office desk. This is a seasonal chart of November soybean futures. Notice that, seasonally, soybean prices have a tendency to work higher from now until June. So, your window for marketing starts NOW! You likely won’t hit a home run and market all of your crop on the high, but you can build a strong average by pricing early and often, especially when the market price for beans is as attractive as it is now. Good luck and feel free to contact me with any questions or comments.

If you have questions, you can reach Naomi at nblohm@stewart-peterson.com.

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2017 Stewart-Peterson Inc. All rights reserved.

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