What are you doing about all the beans you’re storing?
Your grain merchandiser can take care of the paperwork for setting up a minimum price contract that sets $13.40 as your minimum price and lets you take advantage of any further rally in the market from the increasing value of your call option. Your merchandiser should also tell you that if the market does not rally and your call option expires worthless, your cost will be the 31¢ premium.
Johnson also notes that if you are deferring any income into 2014, ensure that you are working with a grain dealer which protects you from any loss of money due to the fact you would be an unsecured creditor.
Soybeans have demonstrated a healthy rally from their harvest lows due to concerns about a shortage of soybeans later in the year in the US. While global demand will be fed from South America, any threat to production will be reflected in the US futures market. Due to the market’s inverse for soybeans, which does not pay for storage, it may be wise to sell cash soybeans and maintain your ownership with a call option. Such a plan would protect you from any decline in the cash market and allow you to benefit from any rise in the futures market.