Soy markets have been charging in recent days, and analyst Karl Setzer thinks this might be a good opportunity for producers.
“There’s a lot of opportunity to lock in a basis,” Setzer said. “You could make a two-stage sale — lock in your basis and your futures later on.”
While basis prices are strong, the Agrivisor analyst said this could be a good time for farmers to consider some futures risk management for next season. Futures options are becoming a more affordable choice, and a good opportunity to secure some better prices. Looking at some of the prices in historical context is important, he noted.
“We are coming out of harvest with corn futures at $5.75 and soybeans at $12.50 with some of the biggest yields we’ve had in recent years,” Setzer said. “If you don’t know what to do with your bushels and you haven’t sold any, I wouldn’t hesitate to lock in some profit at these points.”
Profit will be especially important going into what is expected to be a volatile winter season and 2022 planting season. Price action around the major holidays of Thanksgiving and Christmas can always be volatile, but Setzer said this year could be even more so than usual.
“South American soybean harvest is likely going to be underway in four weeks,” Setzer said. “Then in five to six weeks, they will start exporting those soybeans and we will see if demand for U.S. soybeans backs off.”
Another factor to consider is expected input price jumps and shortages when planting season comes around. Yields will be more difficult to predict, but corn and soybeans will also find plenty of demand, making corn a still-attractive option for those who may consider switching some acres.
“The price ratios still favor corn even with the elevated input costs,” Setzer said. “There’s a tremendous amount of feed demand and a tremendous amount of ethanol demand. The local demand will keep acres from shifting too much. What concerns me more than the cost of inputs is the availability.”