October 4, 2022
December 2022 corn futures are almost $1.00 above the spring crop insurance price, nearly $3.00 above the five-year average for December futures at this time of year, and at a 10-year high. November 2022 soybean futures are more than $3.60 above the five-year average for November futures at this time of year and also at a 10-year high. This has resulted in exceptionally high gross revenue for 2022 corn and soybean production in many areas.
U.S. corn harvest has begun with the USDA this week pegging nationwide progress at 20%. With generally dry weather forecast for most growing areas, progress is likely to accelerate into next week. Soybean harvest is also underway with dry weather conditions pushing the harvested average ahead to 22% as of yesterday afternoon.
As a student of the market, you understand it is imperative to get control of bushels and defend your balance sheet as harvest takes place. That is underscored in 2022 by the attractive gross revenue that is available in many areas.
Looking at the above listed chart, at $6.85, December 2022 corn futures are almost $1.00 above the spring crop insurance price of $5.90. This futures level is nearly $3.00 above the five-year average for December futures at this time of year, and a 10-year high.
Although corn yields generally have fallen short of initial expectations, they remain considerably above the severely reduced levels seen in 2012, when December futures made an all-time price high.
To quantify the current situation, the matrix above shows the cash corn price on the vertical axis and the realized yield on the horizontal axis. To be more specific, if a producer realizes a 220 bushel per acre yield (highlighted), then gross revenue per acre would be $1,408 with a cash corn price of $6.40.
This seasonality chart shows the nearby soybean prices from 2013 to 2022. For example, at $13.65, November 2022 soybean futures are more than $3.60 above the five-year average for November futures at this time of year and a 10-year high.
As with corn stated earlier, soybeans generally have fallen short of initial expectations. They remain considerably above the severely reduced levels seen in 2012 when November soybean futures made an all-time price high.
Similar to the corn review, the matrix above shows the cash soybean price on the vertical axis and the realized yield on the horizontal axis. To continue the example, if a producer realizes a 65 bushel per acre yield (highlighted), then gross revenue per acre would be $861 with a cash bean price of $13.25.
As a prudent risk manager, you understand the importance of protecting the gross revenue of your operation. Various risk management tools can be utilized to establish a price floor for the 2022 crop and provide upside opportunities. Now is an important time to consult with your Advance Trading advisor to execute a marketing program for realized production.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
Information provided may include opinions of the author and is subject to the following disclosures:
The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
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