'Last year I built a new bin and stored all of my soybeans, then prices dropped by over $1 per bushel. I wish I had never built that bin!"

That was the chagrined comment from a frustrated Iowa farmer last summer. I hope he uses the bin this year to hold the crop at least until January of 1999.

For many reasons, the situation is very different in the marketing year that began Oct. 1 than in the one just ended. Several factors suggest that using your storage will pay big dividends.

First is the price difference from last year. In 1997-98, soybean futures rallied over $1/bu in the first eight trading sessions of October. The grain markets put in a counter-seasonal rally and high during harvest.

The net results were $7 soybeans in November, $6 soybeans in February and sub-$5 soybean prices by August. With $4.60 soybeans in the western Corn Belt and just over $5 cash beans in the eastern Corn Belt this year, the flat price risk is not as great as was storing $7 soybeans last year.

Second is the big carrying charge that the futures market is providing. Last year, the soybean market was inverted most of the year. In an inverted market, the cash bids are higher than the bids out 30, 60 or 90 days later.

Last year, if you checked your bids, you would find that your bid for current delivery was almost always higher than if you stored two or three months. The logical move was to sell the cash soybeans. And if you wanted to retain ownership, you could buy back a call option or futures contract.

This year, the bids out two, three and even six months later pay you a much higher price. This higher price is more than enough to cover your cost of interest to hold soybeans until later.

A market that offers a higher bid for each later month is called a carrying charge market. This year, the market offers a good reward to store (carry) soybeans until the May-to-July period.

When the futures market rallies later this year and into 1999, you will face two key questions. They are: when to pull the trigger and make the sale, and which month to sell the soybeans for delivery. Making the right merchandising decision will impact your profits as much as making the sale on the right day.

As you can see, the Iowa farmer who was frustrated by storing last year should be well rewarded for storing this year - as long as he doesn't store too long.