14. Marketing 2012 Crop
• Short crops have long tails with early peak, 5 of 8
years before November of year of harvest
• Darrel Good on Farmdocdaily
(www.farmdocdaily.illinois.edu)
14
15. For RP holders, Consider Hedging
Production
• Nov 2012 contract on 7/25/2012 was at
$16.00 per bushel
• Many hold RP policies at 75% and higher
coverage levels
– Uses higher of projected or harvest price
– When harvest price is above projected prices,
RP makes payments on yield below yield
guarantee (TA-APH yield times coverage level)
15
16. RP and Hedging
• TA-APH yield = 45 bushels
• Coverage level = 80%
• Make payments when yield below 36
bushels (45 bushels x .8)
• Shortfall at harvest price, when
harvest price is above projected price
($12.55) 16
17. • Current prices are not good price
• Can hedge up to production guarantee
17
18. Pre-harvest Hedging
• Good strategy to spread sales, including
pre-harvest
• Hedging losses are occurring on spring
hedges
• Be consistent
18
19. Projected Production
South
Year US America ROW Total
2008/09 80.75 93.80 37.82 211.95
2009/10 91.42 130.88 38.76 261.08
2010/11 90.61 132.87 41.22 264.69
2011/12 83.17 110.50 43.20 235.88
2012/13P 83.01 140.80 43.35 267.16
Following shows projections with 37.5 U.S. yield
2012/13P 77.00 140.80 43.35 261.15
19
20. South American Production
(million metric ton)
160
140
120
Million Metric Ton
100
80
60
40
20
0
Marketing Year 20
21. Soybean Consumption
(Million Metric Ton)
Marketing South
Year U.S. America ROW Total
2007/08 51.63 72.78 178.11 229.74
2008/09 48.11 69.42 173.23 221.34
2009/10 50.67 74.17 187.34 238.01
2010/11 48.39 79.75 202.91 251.31
2011/12 48.35 79.08 205.08 253.42
2012/13P 47.21 84.08 215.93 263.15
21