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| Not long ago, I looked at all of the new crop contracts on the books. I sorted them from highest price to lowest price. My takeaway was that those who sold flat price had the highest price. Those that sold Futures fixed and set basis later was second. Those that sold basis had the lowest price. The first two groups had $4.00 corn sold. The latter had no $4.00 corn sold. Using basis only contracts in a falling market just begets disastrous results. May work some day but this year not so much. I am not sure it is the best route for farmer marketing in most years. Over the year with the exception of harvest time, basis in our area does not fluctuate much more than 10 to 15 cents. We all know what the board can do. I am a proponent of setting the most important part of the cash equation first. Real basis traders trade basis for good reasons. Not sure that is the case with farmers. Often they use it to get around storage or DP charges when in fact it will often cost them more than the storage would have been. Just my observation. | |
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