Should the old/new crop inverse influence new crop revenue management?
Crop markets continue to be volatile, Both the corn and soybean markets are inverted between crops (old crop prices higher than 2021 crop prices). Should that situation influence your marketing risk management for the 2021 crops? It is difficult to manage risk management in this environment. When cash corn is selling for $6 to $7 per bushel, how does a new crop sale at $4.80-$5.00 feel. Even with price setbacks for new crop experienced in May, new crop corn still offers $300 per acre above ISU cost of production estimates and new crop soybeans offer above $200 per acre above cost estimates.
Ed Usset from the Center for Farm Financial Management at the University of Minnesota did an interesting study on new crop price direction and magnitude in years with inverses like 2021. Those ideas are included in the presentation.
A short recorded presentation about price, revenue and a historical look at years when on old/new inverse was present is linked here.
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