Melvin Brees
Farm Management Specialist
University of Missouri Extension




Decisive Marketing

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Please send your comments and send suggestions to Melvin Brees, Farm Management Specialist, University of Missouri Extension, #1 Courthouse Square,  Fayette, MO 65248, call 660-248-2272, or send messages by e-mail to:
April 20, 2001

No Recommendations?

If you look at historical price patterns, this should be the time for making new crop sales. Typically corn and soybean prices rally into the spring planting season with corn price peaking about mid-April and soybeans near mid-May. New crop sales, made during this period, are often the most profitable sales of the marketing year. Yet, if you look at the recommendations from most marketing analysts, very few have recommended new crop (2001) corn sales and almost no one has made any new crop soybean sales recommendations.

With the exception of the 1999 summer price spike down to $4.01 1/2, soybean futures prices are at the lowest levels since 1973! New crop soybean cash bids for Central Missouri locations all begin with a "three" with most prices under $3.90. Some MO locations have new crop bids at $3.70 or less! One of the most common goals of marketing is to "avoid selling at or near market lows." Nobody is going to recommend early sales when soybean prices are at the lowest levels in 28 years!

The dilemma is that prices could go lower. Prices usually trend downward from the spring price peaks after the crop gets planted and progresses toward good production. Higher prices in mid-summer or at harvest time usually only occur with poor growing conditions and disappointing production prospects. While weather is always a "wild card," it is not a big concern at present. Most of last year's dry areas have received moisture and early summer weather predictions are suggesting cooler and moist conditions this summer. In fact, more are concerned about too much moisture that could delay corn planting--a situation that could lead to even more soybean acres and one that is less likely to produce a short crop. Whatever the weather, right now it appears that burdensome World soybean supplies will continue and more than enough corn will be produced. The bottom-line? While new crop prices are at low levels and sales should be avoided, prices could get worse!

About the only new crop strategy left is the market loan or LDP. New crop soybean prices are well below market loan price and corn price is near (or only slightly above) loan. In either case, the least cost and simplest strategy is to rely on the market loan program to protect prices at the loan price. This is the position taken by most analysts when they can't recommend any sales. However, the market loan is only a tool to limit price risk; loan prices don't really offer profits.

It's unusual to not have market sales recommendations for a percentage of new crop production at this time of the year. Without significant production problems, harvest prices are not likely to be much better than current prices. Loan price doesn't meet business profit goals. This means that, regardless of how busy you become with production tasks, you need to continue to follow the markets closely and pay attention to changing sales recommendations. It presents a challenging marketing situation, especially if you have to move grain at harvest. --Melvin

University of Missouri ExtensionDecisive Marketing - April 20, 2001 -- Revised: April 20, 2004