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SC Iowa | jjoseph........well, let's start with why the person was wanting to move the corn......was it because they needed cash or because maybe it had moisture in it and may not store, or maybe it had something to do with roads...
in any case, the fact they are moving the corn on a basis contract tells me they did not have it hedged......so this idea of "paying for storage" by losing the carry in the market is a moot point......it was going to lose the carry whether in their own bin unhedged or having been delivered on a cash or basis contract.....
the only way to earn the carry is by setting a hedge or by selling a forward contract that captures the gain in futures between March to May/June/Sept futures.....
this is how a lot of value goes to "money heaven"
Ray J | |
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Basis contract
