SoyRoy: Market Action At Last
Volatility came last week in the form of reaction to the strangest presidential election in my memory. I am old enough to remember the Truman-Dewey contest. However, the recent election surely ranks right up there with that earlier contest. When the dust was settled, the results were not all that much different than we might expect in any contest where the outcome is in question for a long period of time.
The dead-cat bounce began in September at a cash price at the local co-op of $8.55. At Friday’s close, the cash bid at the same location was $8.85. That shows a benefit from storage of 30¢. That is not a big profit. However, odds are good that if the beans are stored into spring, the cost per bushel per month will probably be reduced and the profit increased.
In addition, there is spread of 22¢ between nearby January futures and July futures. That margin is available to hedgers who are willing and able to sell the futures and lock in the July futures contract. It is rare to see that kind of difference between those delivery months. To get the spread requires the marketer to be flexible and watch the market continuously. Storing unpriced is another alternative. However, there is the risk of futures prices dropping when the South American crop becomes available.
I spent last Wednesday at the Nebraska meeting of the 2016 Crop Insurance workshop. A capacity crowd was on hand to hear speakers discuss the current condition of agriculture and share ideas on how to survive in the current times. In my portion of the program, I discussed how I have survived 40 years on the farm in stressful times when dealing with drought, floods, high interest rates, and low prices. It was an interesting challenge.
Some attendees wondered why eastern Nebraska soybean farmers still had beans in the field unharvested. It was difficult for some to understand how the damp weather made harvest difficult for the days when we are normally harvesting.