Centre county Pennsylvania, USA | John, interesting comments as always, thanks. Here in central PA, our prices are set in the local cash market. Our local end users (farmers, feed mills, and ethanol plant) bid whatever cash price is needed to fill their needs. That price is not set by futures or basis, it's set by local cash market auction between them and producing farmers or their agents.
I think futures and basis are for folks that piggy back on the cash market. It does give those folks an opportunity to play in the the game without actually producing anything but paper. They do appear to bring plenty of money and brainpower to the game that otherwise would not be in the game. Futures and basis doesn't appear to be wrong, just part of the game.
We have no quarrel with those folks. In the long haul (time wise), some of their money seems to end up in the pocket of producing farmers that are lucky or experienced enough to understand how that game is played. On balance, I think it has been a pretty good system, but that doesn't predict how well it will work going forward in time. |
The "out of soybeans" thread below.
