This is probably the most ill advised marketing technique one can use, but I bought Jan. 1550 calls today to cross hedge half of my corn bushels sold today. The theory here is that soybeans go up per bushel more than corn does from here. If I gain a buck on the position, I actually gain 50 cents per bushel on previous sold corn. On the flip side, if beans don't go up I only reduced my cash price by roughly 15-16 cents a bushel. Normally, I don't crosshedge anything. However, I remember back in 04' when AgResource had clients selling soybean futures for a cross hedge on corn. It worked out extremely well. I'm more than likely very stubborn in my thinking, but we're over 70% committed on exports for soybeans while only being 45 days into the marketing year. It appears the trade is already trading a huge record crop coming out of SA. I don't think there's any risk premium built in at all.
The biggest concern I have with regards to China is them purchasing U.S. beans as insurance. If SA does have a big crop, I could easily see China cancel contracts on U.S. beans for cheaper SA beans. However, I'm betting this doesn't happen before the first of the year. Rather, it will more than likely happen in the Feb./March time frame. If one watches the weekly sales report, it appears China is already doing this with corn by cancelling U.S. contracts for cheaper SA supplies. I'm not out a lot if I'm wrong, but I think I appear to gain quite a bit if I'm right. The highs may very well have been set in soybeans, but I've got to think we'll push the 16.50-17.00 mark again before the first of the year.
