Would the strategy have worked in 2003-2004?
Johnson says the strategy would have worked handsomely 9 years ago. And he says if futures rally on continued concerns of South American weather, owning the call option could be more profitable than owning the soybeans with the cost of storage and interest. As prices rose in 2004, and as prices may rise in 2013, you would sell the call option to capture greater profits.
The soybean market is paying for soybeans now, and offering much less money through next summer. At that time, the inverse carry would be reflecting the expected large supply of soybeans coming from South America. While soybeans hold more value now than they will next spring, selling cash beans now and purchasing a July call option will allow the holder to recapture some of the higher prices that could occur for soybeans, should there be weather problems again for Brazilian and Argentine producers.