
Ag economist recommends exit strategy to avoid soybean storage costs
South Dakota farmers are at various points in the season keeping watch over their crop as it grows and progresses to maturity. Protecting that crop and making sure it culminates in a successful harvest is top-of-mind, however, Ben Brown, an agriculture economist at the Food and Agricultural Policy Research Institute, says marketing that crop is an important step in the season. Brown lays out two distinct marketing opportunities: pre-harvest and post-harvest.

“In the pre-harvest period, there’s a very defined ending. When you get to harvest, you’re no longer in the pre-harvest stage; you’re now moving into the post-harvest stage, however, when you get into that post-harvest stage, there’s no end period,” Brown, who is also an extension ag economist at the University of Missouri, told the South Dakota Soybean Network. “In theory that could go on for years, and this is part of the reason why, especially on the feed grains, we run into producers who have grain in their bin three to four years, is because they don’t have a defined exit strategy.”
“One of the things that is easy to forget about is the storage costs that you’re paying to keep those soybeans, those physical soybeans, now an extra four to five months,” said Brown, who made his comments following a brief upward bump in the soybean market, pointing out the inevitable costs of hanging on to the crop long after it’s brought in. “And at least in my calculations that completely covers the rally in the market that we’ve seen.”
Although it might sound logical, Brown says too often, producers don’t heed advice to plan a certain point at which to leave the market.
“Have defined periods of ending and an exit strategy to be able to get out [of the market],” said Brown, “because if you don’t, then you just keep rolling on, and on, and on, and on, and end up with product that you’re storing and paying large storage costs on for a longer period of time.”
Given its current uncertainty, Brown, who is featured on an upcoming edition of The Soybean Pod, calls it positive that the soybean market has performed as well as it has. There could be opportunities this summer for higher new crop soybean prices, he projects, adding that those prices are not likely to last.
“If you do want to take some risk off the table, it’s going to cost you a little bit, but options contracts provide an opportunity to lock in the price today,” he said, “and then if the market moves higher, you’re able to participate in that market.”
The Soybean Pod featuring Brown is available on most podcast provider platforms.