Practical steps each spring
Every spring, sort your position into two buckets. Bucket one is bushels still in the bin: old crop, priced against old crop months, with a sale deadline before harvest. Bucket two is expected production: new crop, to be layered into November strength. Write down the percentage you will sell at each price step for each bucket, and the calendar date that forces action if prices never get there. Producers who keep the buckets separate make cleaner decisions. Producers who blend them tend to hold old crop too long waiting for new crop prices, or hedge new crop too timidly because old crop treated them well last year.
Two different markets
Old crop and new crop soybeans are related but not the same market. Old crop prices reflect what remains in storage and how fast it is being consumed. New crop prices reflect planting intentions, weather, and expected supply this fall. When old crop stocks are tight, July futures can trade at a large premium to November. When bins are full, the spread can invert.
This spread, often called the old crop/new crop inverse, matters to your marketing. A producer holding beans in the bin in spring is watching the July contract and local cash bids. A producer deciding how much of the coming crop to price is watching November. Using the wrong month for the wrong bushels is a common and expensive mistake.
Matching the hedge to the bushels
- Beans in the bin. These are old crop. Watch old crop futures strength and basis improvements from spring through early summer as end users bid for remaining supply.
- Beans in the field. These are new crop. Hedges belong against the November contract, placed in layers during summer weather rallies.
- The transition. From late summer into fall, the market shifts attention to new crop. Old crop premiums often collapse as harvest nears, which argues for selling stored bushels before the combines roll.
A note on spreads
The July/November spread tells you what the market thinks about scarcity. A wide inverse says old crop is short and end users are paying up for bushels now. That is usually a signal to move stored beans rather than gamble the premium lasts into fall. Futures trading involves substantial risk of loss and is not suitable for all investors.