Date of this Version
Cornhusker Economics, June 14, 2000, agecon.unl.edu/cornhuskereconomics
Soybean producers who decide to use the futures markets to price their crop face a number of important decisions. Among the choices they face are whether to use futures or options on futures, when should positions be established and liquidated, which futures months are most appropriate and what particular marketing strategies or combinations of strategies to employ. Ongoing research in Nebraska on soybean marketing strategies from the early 80's through the present has revealed evidence that relatively simple marketing strategies employing futures markets can be profitable for producers, and that the most profitable strategies have been relatively consistent over time. As can be seen on the chart below of the November soybean futures price from 1989 through 1998, definite seasonality appears on average, with peak prices generally occurring in mid-spring, and rather steadily declining prices during the growing season until harvest. Declining prices are punctuated on average with an early summer rally, perhaps explained by trader concerns about adequate moisture, and an early fall rally perhaps explained by trader concerns about potential early frosts.