Soybean harvest is winding down and as it does, soybean prices off the combine are ranging from $12.50-$12.70 with futures bumping up around $13.
“When you’re looking at markets in general, we’re bouncing up against $13 on futures. $13.08 is a big resistance point,” said Luke Swenson, president of The Money Farm, West Fargo, N.D., on Sept. 28. “We haven’t been able to push through that even though we’ve got sustained exports going. You’ve got China buying a handful of cargos a week. It hasn’t been a crazy pace, but they’re still moving and people are happy seeing that.”
Swenson noted that basis – zero at harvest in the Red River valley – is “very interesting.”
“When we were hitting -40 (cents) under this spring, we were locking up some harvest basis knowing that it was early China buying that was helping us out,” he said. “But then you had the hurricane that came through and screwed up the Gulf from the export side, and we quickly saw basis up here jump another 20-30 cents as the (Pacific Northwest port) was pulling grain going west rather than south … and China was looking for some of those extra harvest bushels they were worried they weren’t going to get out of the South.”
That factor has been playing strong on the cash side and growers have been pricing a lot of cash right off the combine, he added.
“In some of the really yield hit areas, you’re actually seeing concern because guys that had priced 35-40 bushels to the acre might not quite be getting it, so there’s a little bit of panic and nervousness there,” he said. “Thankfully, futures hadn’t moved too much when they made those final sales, so it’s not like you see guys buying out a dollar or two in the red, but it is a little concerning that you see some people concerned about making deliveries on all the bushels they priced at harvest already.”
Swenson offered a word of advice regarding marketing, telling people, for the most part, to just get caught up on sales.
“We know that between COVID money, solid prices and solid early sales, everyone for the most part is sitting at a decent spot cash-wise. But don’t be afraid to realize more sales,” he said. “If historically you sell 50-60 percent and you have 30 percent sold (and) you want to be a little greedy, we argue against it. In history you’ve only sold $13 beans off the combine twice. If you think this thing is going to $15 because China is going to buy something, or $20 because they’re going to have a hiccup in Brazil, you know what, sell some cash and turn around and buy some futures, buy some calls.
“But realize some of this profit. Put it in your pocket. Go home with some nice income. Roll up some equipment. Do whatever you need to do, but don’t get too greedy,” he continued. “Always manage capital first, and that’s across the board, that’s corn, beans, wheat, canola, it doesn’t matter what crop it is. Stay within your marketing structure.”
Looking at local prices, at one local elevator in west central Minnesota regularly followed in this column, as of Sept. 28, the October cash price for soybeans was $12.68 and basis was -15 cents under. The February 2022 futures price was listed at $12.98 and basis was at -5 cents under.
On the demand side, Swenson pointed out that export sales have been good. Every couple days it seems another sale announcement comes through, including one last week of 336,000 pounds.
“That’s been relatively consistent, it’s keeping us in line with where we need to be,” he said. “The downside is you haven’t seen any on the corn side yet, and that has the market obviously nervous despite harvest coming in and starting up early, potentially with yield a little below where expectations are.”
Soybean harvest is progressing at a good pace and could be completed within days, depending on location. Producers are making a lot of progress as the weather has been mostly cooperative and there are few, if any, wet spots that producers have to plan harvest around.
“The only thing is, are the beans dead in every spot? You see some green beans here and there from areas that got interseeded later on after frost damage, things like that, that might slow people up more than anything,” he said, “but (overall), everybody is going to be ready to go. You’ve got places that are dry kind of across the board on all crops. They’re going to fly as long as they can get to the field.”