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Ontario's middle east | How they link together basis, futures and spreads. The delivery system is what backs this and makes it function , even though it's hardly a spec of the volume ever involved in that process. It is all tied together and I believe that the futures market can run too far in either direction. In fact I believe it usually does go further than it should on its quest to stimulate demand or decrease supply. It wants to make sure it gets the job done efficiently. It does not, will not, and can't care how much someone bleeds during that process. I believe the market has done its job rationing this bean crop. It's almost Sept, some beans are getting combined and basis is giving the one last piece of possible dignity to anyone that still has beans, in a last ditch effort to flush out the corners of the bins. The volatility you see now is just the death of the inversion, nothing more, nothing less. See my post below and last summers corn posts.
I have a theory that says the grain market figures things out like this: 1. Basis reacts 2.spreads react 3. The futures react ....... And in that order. Remember how the corn market worked this past crop year. 1. Sellers weren't interested at harvest and basis rallied. 2. Spreads came in in January 3. Futures rallied into spring. The market works! | |
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The "out of soybeans" thread below.
