Fundamentally Speaking

Farmer Sales of Soybeans vs. Avg Monthly Price Change

Joel Karlin
By  Joel Karlin , DTN Contributing Analyst

Continuing our discussion of farmer marketing's by month vs. the average percent monthly price change this time we focus on soybeans after covering corn.

This chart plots the average percent of soybeans sold per month by U.S. farmers' vs. the average monthly price change for soybean futures using data covering the period 1995 to 2013.

It is interesting to note that farmers sell over 40% of their crop in the final quarter of the year with the largest amount sold in October at 22.8%.

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In recent years farmers have been selling soybeans right off the combine based on the inverted market structure where nearby prices have been so much higher than the deferred months.

Producers also want to harvest soybeans ahead of corn since they do not handle the cold and wetness as well as corn and are more prone to quality deterioration.

Similar to corn is the fact that the second highest month for farmer sales is January given tax considerations, the need to raise cash for spring plantings and the realization that the prospects for a good South American oilseeds crop usually weigh on values starting after the first of the year.

Of course if they only wait a month they can sell in February which as the accompanying graphic shows is the month when prices tend to increase the most, up 3.4% on average.

It is fortuitous that farmers sell a good portion in the Oct-Dec quarter when soybean prices do tend to increase.

It is the summer period when values are the weakest, culminating in an average 4.1% decline in September, and the largest of the year.

(KA)

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