Sometimes, terminology in grain marketing just makes me laugh…like ‘old crop.’
I mean, if my corn’s been in the bin for 4 years, that’s getting up there in age, but selling in March after I just harvested it in October is considered ‘OLD?’
So that begs the question, “what do people mean when they refer to ‘old crop’ futures?”
First, be sure you understand what ‘new crop’ futures are for each commodity, which is all explained in this post.
‘Old crop’ refers to the futures months between the new crop months. In the old crop months, the crop that’s been stored from the previous harvest will be bought and sold prior to the next harvest.
Take, for instance, soybeans.
You’ll likely be harvesting soybeans in the calendar months of either October or November in the midwest.
Once those soybeans are harvested, they’re either sold right away as ‘new crop,’ or they’re stored, either at a grain buyer or in on farm storage, and become will be sold later as, ‘old crop.’
At some point, the ‘old crop’ soybeans in storage will need to be sold to make room for next year’s crop of soybeans.
Sales of old crop soybeans made between harvest in 2020 and harvest in 2021 will be sold against the old crop futures months.
For soybeans, the new crop month is SX and the the old crop futures months are:
SF: January
SH : March
SK: May
SN: July
SQ: August
SU: September
*Remember, there is not a futures month for every calendar month.*
Ok, now let’s do a couple of quiz questions to check your understanding!
1. If you contract and sell your soybeans for harvest delivery during October to your local grain buyer for a price of $8.75 SX20, is this a new crop or old crop sale?
2. If you store your soybeans and sell them in June of 2021 to your local grain buyer for a price of $9.01 SN21, is that considered a new crop or old crop sale?
Check your answers at the bottom and to keep it simple to remember what’s old crop and what’s new crop, remember the following:
1. There’s only one ‘new crop’ futures month for every commodity. Reference this post if you ever forget how to determine which month is ‘new crop’ for a commodity.
2. All other futures months for a commodity that are not the new crop month are considered old crop.
Answers:
1. new crop
2. old crop