Argentina soybean trade: available market vs futures market

Abstract

Decision-makers for crop production need an increasing monitoring of the evolution of market prices from sowing to harvest time, and product storage. Two different reasons can be considered: that of producers who take into account the existence of the forward market; and that of producers who do not consider this type of market. The general objective of this article was to analyze the price-based commercial strategy. The specific objectives were to determine the price evolution of soybean from sowing to harvest time, in the last 25 years, and to verify if a simple strategy to operate in the futures market was positive in the comparison with the available prices. The conclusion is that, in the last 25 years, the use of a simple hedging strategy operated in the forward market, the use of futures contracts at the sowing time, was not beneficial for soybean crops. Futures market operations were not convenient for 16 out of the 25 years analyzed (64%). In the studied period, the best harvest price was attained in the available market, that is, without this type of simple hedge.