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Corn+Soybean Digest


The answer - probably not. Unfortunately, the year 2000 will likely be a year when producers price old-crop soybeans and corn early in the year and also start forward contracting the new crop much too soon. Why? Because everyone has now learned that's what he or she should have done the last two years.

How many times have we heard a neighbor say, "I stored corn last year and learned my lesson. I'm not going to do that again." What he really learned was that he shouldn't have stored corn last year. Rarely does the same marketing strategy work two years in a row. Still, as human beings we are highly influenced by what we did wrong or right last year.

Soybean and corn prices are just now coming off the lowest levels they've traded since the early 1970s. Soybeans, specifically, when priced in Japanese yen instead of U.S. dollars, are at the lowest level in 30 years. When prices are at depressed levels such as this, be alert for bullish surprises in the market because most of the bearish news is already built into current price levels.

The chart below shows a pretty convincing story about the odds of when cash soybeans make their lows and highs. Since 1960, for example, the lowest price for cash soybeans in central Illinois has occurred in October one-third of the time. The lows occurred in November 7.7% of the time. Never has the lowest price of the year occurred in December, March, April, May or June. The low has occurred 10.3% of the time in July and 25.6% in August. Usually, soybean prices either bottom early or they bottom late.

The odds of highs are a little more spread out but still strongly indicate that most of the highs either occur early or late. The most dominant month for highs in soybeans is July and the second most dominant month is September, when 17.9% of the highs have occurred.

So far this year, the lowest price for cash beans in central Illinois occurred on Tuesday, Oct. 26, at approximately $4.34. That would fall in line with historical averages. And as long as that low holds through the end of February, then history indicates the odds are very high that the highest prices for cash beans will not likely occur until June, July or August.

The bottom line: This is not likely to be a year to be "trigger happy" for pricing new-crop soybeans. We have 24 months in which to market every crop - 12 months before harvest to 12 months after. Let's make use of the time available for new-crop soybeans.

Parting Thoughts

The seminar circuit is winding down - thank goodness. Three to four seminars per week is getting more than my aging body can handle. But it has been a fun winter visiting with farmers from all over the U.S. Overall, it appears attitudes are improving and pocketbooks aren't nearly as empty as some expected six months ago. Farming is a cyclical business and, fortunately, the cycles are pointing to better times ahead.

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