Texas/New Mexico Stateline | And have the physical.
If basis is historically wide, you would leave that open too. And hope it improves over that same time.
Past two years if a person had their own storage, kept the basis open, and sold the carry could have really made out nicely. If you had deep pockets and could wait, which is also a factor!
For example, 2016 wheat, if I remember right harvest basis here was -.80-1.00. Nobody wanted it. Could have stored it and sold July 17 futures and sat on it. Seems there was about .80 carry over that time, and also June this year basis really improved locally. Protein was good, and basis improved to about -.50. Net result would have been over well over $1 improvement just letting it sit in the bin.
Of course I did not do that as I don't have my own storage, and needed to sell it for cash flow.
This year 2017 wheat, you had a chance to sell 2018 July for $6.10 ish. If you had put 2017 in the bin, sold 2018 futures you would already have $1 just from the change from then until now. Who knows about basis, but it is looking like we are going to be stuck below $4 futures for a while. That could be $2 added to 2017 by selling that carry.
I did not store my wheat, but I did sell some 2018 at that high point.
Can't quite swallow permanent storage or bags either due to irregular yields, multiple landlords, and such.
edit to add: As you said if you did a basis contract, sold the futures with the physical in the bin, the carry would be exact to what you lock in.
Edited by milofarmer1 10/6/2017 19:10
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Wheat is Cheaper than corn.. again.. edit add: and even SORGHUM!!
