There are several marketing strategies you can use for corn and soybeans harvested in 2001.
You'll find the details in a new fact sheet written by Robert Anderson, farm management educator with the University of Minnesota Extension Service. If you have on-farm storage for corn, Anderson says one low-risk marketing strategy is to take the LDP and hedge into the spring and summer months, whenever the carry in the market is large.
A carrying charge market is a description of a futures market where future months are priced as a premium to the present month. Anderson says this strategy gives you an opportunity to price grain at attractive prices with no downside risk, except for basis fluctuations.
An alternative to taking the LDP at harvest is to put grain under loan, then lock in the Posted County Price (PCP) for 60 days. If prices rally during that time frame, the loan can be repaid at the locked-in rate, then sold as a cash price that has improved from the price at the time of the lock-in. If there's no price rally, you can let the lock- in expire and continue with the nine-month loan.
The big factor that will affect winter soybean prices is the expected South American crop. Anderson says it's likely our soybean prices may not increase enough to cover storage costs after the late-winter time period, after normal basis improvement occurs.
If you wish to speculate on a winter increase in prices, Anderson says you may want to LDP the soybeans, sell the cash commodity and purchase call options. Many times the cost of options is less than the cost of storing the physical commodity. In addition, the downside risk is eliminated and only the cost of the option is at risk.
You can find the article titled "Corn and Soybean Price Outlook and Marketing Strategy for 2001 Production" at http://swroc.coafes.umn.edu .